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September 6, 2010

Do Tax Cuts Create Jobs?

-- by Dave Johnson

In California the right, funded by oil companies, has an initiative on the ballot to stop implementation of our CO2 law "until unemployment reaches 5.5 percent." The point is to make people think that the CO2 law causes unemployment.

The idea that a payroll tax cut (i.e., Social Security tax) will help create jobs is the same thing -- cutting taxes to boost employment makes people think taxes cause unemployment. The net result is that we can't get infrastructure, schools, courts, etc. funded.

Tax cuts might provide some stimulus because they force more borrowing, but really, how many employers are going to hire people because payroll taxes are a bit less? What are they going to hire them to do, read the paper? Compared with how many employers would be doing anything they can to bring on employees if customers were pouring through the door?

Posted by Dave Johnson at September 6, 2010 8:44 AM


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