Tax Cuts, "Trickle-Down"Economics, & Graph Refutation.

Economics Economics Questions
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1

  • Many left-leaning people that argue that tax cuts aren’t the best policy for the economy employ graphs, similar to the one’s above, that highlights a negative correlation between tax rates and economic preformance (whether it be job creation or wages). If at all, how are these graphs, and ones like them, misleadleading and what is the best way to refute them?
2

http://en.wikipedia.org/wiki/Correlation_does_not_imply_causation

3

Let’s think about this. How would higher taxes lead to more jobs? Well, it might lead to more government jobs. But what logical connection is there between high taxes and higher employment?

Neodoxy 4

5

Also, this is a really sick mentality that leftists have. If we stop robbing someone and it doesn’t benefit someone else, then we shouldn’t stop robbing that person.

6

If we’re talking simply about employment, this is all you need:

Employment-Population Ratio

http://data.bls.gov/pdq/SurveyOutputServlet

Nevertheless, there are so many problems with breaking up economic data into “top tax rate eras.”

7

On that note…

8

Low taxes don’t “create jobs” and high taxes don’t “destroy jobs.” Involuntary unemployment is caused by either endogenous/exogenous wage rigidity, or structural imbalances. The idea that lower taxes will somehow lower the unemployment rate is a myth. At the same time, though, lowering taxes will indeed have stimulating effects as it allows individuals to keep and therefore invest/consume a higher portion of their income (rather than having it confiscated by the government), and reducing capital gains taxes, for example, will increase investment (and reducing consumption taxes will obviously increase consumption, etc, etc).

There may be a relationship between payroll taxes and employment though.