by R.G. Rich
Do tax cuts for the wealthy create new jobs? In fact, the exact opposite is true, and well illustrated in recent history.
Raising tax rates for the wealthy creates new jobs.
Why? When rates are raised, the value of a tax deduction is increased in real terms. Hiring a new employee or buying a new piece of equipment is a new business expense. At higher tax rates, the wealthy, and businesses small and large, look to offset taxable profits.
When rates are low, there may be little incentive to hire or replace older equipment because taxes are not perceived as a burden. When rates are high, those same increased expenditures provide a bigger economic benefit through tax savings, thereby creating an additional incentive to spend. High tax rates provide an incentive for expansion, in order to shelter profits from taxes. Higher rates provide an added benefit for risk-taking.