Low Taxes Creating Jobs = Vodoo Economics Part I. Low Taxes Doesn't Create Jobs

The short term memory of the American public is truly astounding. "Trickle Down" economics wasn't effective in the 80's and yet it has been trotted out as the cure for this "Great Recession" by the Tea Party and the GOP despite the fact that George Bush's 2000 incarnation of trickle down was a causal factor to the current economic crisis.

In this incarnation of Vodoo Economics the use of "Job Creators" rhetoric instills the fear in the masses that if the country taxes the "Job Creators" they will stop creating jobs and increase unemployment. This one argument is the one that I am addressing; lowering taxes on "Job Creators" otherwise known as the wealthiest 2% does not create jobs.

Before George Bush enacted what is commonly referred to as the Bush Tax Cuts, jobs were growing and Clinton had increased jobs at a rate of 21%. CNNMoney reported in October of 2000 "The U.S. unemployment rate fell to 3.9 percent in September, matching the 30-year low touched in April, as strong job growth in service industries helped reverse a two-month decline in hiring, the government reported Friday."

When those tax cuts took effect, job growth came to a screeching halt. Clinton and Bush both served the same eight year term, but through strategic tax cuts on small businesses, raising taxes on the highest income levels (aka "job creators") and incentives Clinton created 22 million jobs whereas by lowering the taxes on those same "Job Creators" and reversing Clinton policies Bush left office only creating 3 million jobs. According to data from the Bureau of Labor and Statistics "The numbers bear this out, too. BLS data, adjusted for inflation, show that average weekly wages grew by 21 percent from the start of Clinton’s first term to the end of his second term. They grew by only 2 percent under Bush’s two terms."

Lowering Taxes on "Job Creators" does NOT Create Jobs

That is one slice of history, so let us examine another when tax rates were considered low. During Reagan's eight year presidency trickle down economics became popular. The faucet tightened up however as Reagan was only responsible for creating around 16 million jobs. To put this in perspective, Carter created 10 million jobs during his only four year term. All of the tax cuts and de-regulation that was introduced during Reagan's presidency didn't actually trickle down, but up.

Lowering Taxes on "Job Creators" does NOT Create Jobs

Let's look a little further back in history at a slice of life that more accurately reflects our current economy; The Great Depression. Or more accurately, the period directly preceding the Great Depression. From 1925 through 1931 the tax rates on the wealthiest of Americans only reached 25%. By the end of this Laissez-faire period, debt had increased, demand for real goods had lowered and unemployment rose to 25%. Although it would be simplistic to credit low taxes as the cause of the depression, clearly the top "percenters" were not allowing all of that money to trickle down.

Lowering Taxes on "Job Creators" does NOT Create Jobs

All of these examples are interesting and timely, but the real truth about tax policy and jobs was witnessed by any person who was looking for a job in 2008. The unemployment rate steadily increased from 2007-2008 to a rate of 7.2% according to BLS.

Tax rates were low for the top earners, those "Job Creators". According to the New York Times in 2007 "Based on an exhaustive analysis of tax records and census data, the study reinforced the sense that while Mr. Bush’s tax cuts reduced rates for people at every income level, they offered the biggest benefits by far to people at the very top — especially the top 1 percent of income earners."

Obviously something is amiss here. Low tax rates for "Job Creators" and rising unemployment. Speaking the truth is easier if your constituency doesn't pay you to lie, and in the case of the Tea Party and the GOP, they must be getting paid a lot to continue to spin the tale that jobs will be created with lowered tax rates.

It simply isn't true.

Lowering Taxes on "Job Creators" does NOT Create Jobs

http://www.politifact.com/ohio/statements/2010/jul/25/sherrod-brown/sherrod-brown-touts-job-grown-during-clinton-presi/

http://www.progressinaction.com/republicans/wealth-redistribution-wealthy-americans-are-taxed-less-now-than-when-reagan-was-president/

http://en.wikipedia.org/wiki/Jobs_created_during_U.S._presidential_terms

http://www.cleveland.com/datacentral/index.ssf/2010/10/us_job_growth_and_loss_under_p.html

http://econc10.bu.edu/Ec341_money/Papers/Carroll_paper.htm