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Why lowering taxes on the 1% does not work, in 500 words or less.

The argument is that lowering taxes makes business thrive. And they will hire more people.

My first question is,  “What do business taxes tax?”  My second question is, “Why do shop owners hire more workers?”  It is my understanding that the business taxes tax profit.  Profit is that amount that is left over after deducting all the business’ expenses.  Wages are part of those expenses.  That is a curious item because increasing employees ALSO decreases taxes because they reduce profit.   OK, so if you reduce taxes, you increase profit and provide more money to the shop owner.  However, if the employees the shop owner already has are not doing very much—that is to say that two waiters on one table will not cause the existing customers eat more, there is no need to hire more.  Therefore, lowering taxes will only increase the profit of the shopkeeper while lowering the revenue of the government.

Let us keep in mind that the money the government spends mostly goes to pay people to do things for you—the most visible of which are police, fire, and librarians.  These people are also the shopkeeper’s customers.  When you cut taxes, you cut those jobs and are thereby cutting  your customer base.  This leads me to my second question, “Why do shop owners hire more workers?”   The answer is pretty simple.  The shopkeeper’s workforce is not able to keep up with his customer’s demands.  So, more customers require more staff.

Therein lies the glowing error of the initial argument.  The private sector is not hiring because they do not have enough customers.  Lowering taxes only increases the shop owner’s profits but does not provide any reason to increase output.  IN FACT, it actually decreases the customer base by putting people out of work.

HOWEVER, if government can increase taxes on the rich, it will not stop them from spending, it will just siphon off a bit from what will go into the banks.  The government can then hire more workers, who will create more customers, and eventually require the shopkeepers to hire more people.  The economic growth is self-stimulating once the government primes the pump.  The reason the economy did not take off after Obama tried his first stimulus was because 8,000,000 people lost their jobs under Bush and the Republicans, with the “Blue Dog Democrats,” prevented Obama from spending what was needed to get enough of those 8,000,000 back to work.  It was luckily enough, however, to stop the bloody hemorrhaging of jobs that was taking place as he took office.

My question to you is, “If you want more customers, than why are you in such a hurry to elect someone who will make your boss richer while causing more customers to lose their jobs?”


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Number of Entries : 228
  • http://www.facebook.com/people/Ken-Sayers/100000644760696 Ken Sayers

    Complaints about increased government spending will increase the deficit can easily be dealt with by the fact that each job the government adds, causes more jobs to be added in the private sector. The job increases, in turn, increase government revenue through a greater tax base, thereby reducing the deficit.

    • corey booker

      Wow. You really don’t understand how the economy works, do you? This is wrong on so many levels.

    • Ken’s Mom

      Ken, wipe that shit off of your face. Oh, sorry, that’s your beard. Love, Mom

  • rozlee

    I could reduce that argument to less than forty words. We gave massive tax cuts to the 1% ten years ago. They’ve been sitting on the biggest profits in fifty years. Where are the jobs?

  • http://www.facebook.com/tom.severns Tom Severns

    I have made this argument for years, and small business owners I have spoken with agree: “job creators” will create jobs when the demand for their goods or services increases by enough to pay the additional cost of the new employees, plus a profit. The fact that the tax on the additional profit is 38% rather than 34% is completely irrelevant to the hiring decision.

  • rblevy

    This is so commonsensical. Yet even many in the lower middle class vote for the rethuglicans and by doing so go against their own interests as workers. Why? Because they like to think that some day they too will be rich and don’t want their “future” income to suffer from more taxes.

    • VanSaint

      Correct. And now that I have worked hard (and been lucky) and have gone from poor to rich, I do not want deadbeats like yourself taking the value I’ve created and wasting it on inefficient public government and needless wars.

      • rblevy

        With an attitude like yours, I shudder to think how you came by your wealth.

      • rblevy

        With an attitude like yours, I shudder to think how you came by your wealth.

  • http://www.facebook.com/people/Willard-D-Russell/1284685385 Willard D Russell

    The GOP proved 30 years ago that trickle down economics do not work.
    So what is their plan now?
    More trickle down economics.

  • TheInterloper

    It seems so simple really. In a supply and demand economy, demand is the powerhouse and supply, the beneficiary. But demand remains impotent until enough disposable income turns “demanders” into consumers. Had the bail-out money been given to consumers they could have chosen democratically where they wanted to spend it and given a kick-start to the economy into the bargain. Furthermore, regarding employment, the powers-that-be would have us believe that employment is an act of charity. In truth, employment is a pragmatic act made necessary by the existence of more customers than your current staff can handle. Again, the consumer, and not the business owner, is implicated here; The consumer provides the business that makes employment necessary. So, instead of offloading democracy to the corporate sector and promising that we’ll be looked after, it’s far more a case of - look after us and we’ll look after business.

  • Corey Booker

    No, Carl, the money that government spends mostly goes to people who can’t or won’t do anything productive with it. To our military, to a bloated health care system, and to a mismanaged and corrupt welfare system. THAT is why the rich (as you like to label them) don’t want to pay more taxes…because YOUR government squanders that money instead of generating a return and growth on that money like they have been able to do.

  • forever_realist

    500 words is way too many for the attention span of a Tea Party Member.
    Lets just do this!!!!
    1) The 1% are best at hiding their $ (personal income).
    2) Business expenses (salaries, healthcare, machinery and charity) are deductible, and an effective (and Patriotic I might add), way of hiding that $.
    3) If you reduce income tax, they don’t have to hide it.
    4) The implications should be obvious to even the most “grass roots” among us.

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