Can someone explain to me how tax cuts "create jobs"?

Because government doesnt have any money. They need to take it from someone or even worse they need to PRINT IT. Making the money they do spend worth less. That is why government spending is bad.

Shit you have me on ignore, never mind.

Well, the US government is around $70 trillion in the red

yes the money is still in the economy but
it is not directed to the places it needs to go.
it effectiveness
you need the money to be targetted to certain areas to be most effective.

And by giving $500 or $1000 or whatever to each individual taxpayer to do with as they please, it then gets directed most effectively?

But when the govt spends it on roads, bridges, tunnels, a new electricity grid, high speed rail, etc then it's not going to the most effective places?

one word
pork.
A government bill will allocate money not on what is best for the country but what is best for the districts represented by the congress. It results in stupid projects which have no investment value other than the jobs in a region. Once the money is gone those jobs disappear as well. When the money i is directed to investment, those that make money, and can be sell sustaining are rewarded, those that can't are not.

governments have to worry about appeasing the unions in a way that business do not, because quite simply unions can cost an official an election. The workers have to much power so yes government spending ends up being wasteful. Market driven investment is not so influenced so it becomes far more productive even with the act of buying stuff from china.

Protectionist thinking results in retalitory tarrifs so if the government were to "direct" the income to home grown business that would result in foreign countries doing the same. which would cost even more jobs in america.

Paying down a credit card debt, give the banks more money, which loosens lending restrictions, to businesses, this is exactly what is currently need now.


you can't sell an investment unless someone else buys it, the transaction is balanced. So if person A sells the stock to pay down his debt person b must buy the stock.

The end result is the company keeps the money, in the investement coffers, while the banks get more lendable capital (the desired result). IF they spend it instead, that some business gets the money, and with lower taxes can give bigger dividends which again put money into the economy to pay down debt and free up lendable capital (the desired result).

The two examples you gave while rolling your eyes are examples of the types of business that would be help specifically by the loosening of the banks lendable capital.
And all the jobs that are created by those business is where the job growth is comming from.

RE: tax cuts for small business owners-

According to economist Robert Frank from Cornell, the answer is a resounding no. Tax cuts to small business owners do not stimulate employment. Here’s the argument. Suppose that a potential hire will produce 10 units of output per hour for a firm and the output will sell for $2. The worker can be hired for $15 per hour. Should the firm hire the worker?

Yes, hiring this worker will generate a $5 profit per hour for the employer. Let the tax rate on the owner’s income be 20%. Then the take home pay for the owner is $4 per hour.

Now increase the tax rate to 50%. Is it profitable to hire the worker? Yes, the worker still generates $5 in profit for the firm, but now the owner’s take home pay is $2.50.

Now let the tax rate be 80%. Is it profitable to hire the worker? Yes, the worker still generates $5 in profit for the firm, but take home pay for the owner is only $1 now (assuming this is still above zero economic profit for the owner).

Notice how the condition determining whether the worker is hired, a comparison of the wage paid to the value of the output the worker produces (W compared to P*MP from your principles courses), does not depend upon the tax rate paid by the owner.

You're assuming all government spending is "pork", when earmarks are less than 1/10th of 1% of the overall federal budget.
Also, individual consumers will not allocate money based on what is best for the country, but what is best for them....that may, and often does, include putting the money in a piggy bank, paying off a credit card, or buying products that were manufactured in another country.

The union thing is hogwash. Unions vote democrat, period. The idea that government spending is less stimulative because union workers may do the job is ridiculous.

The private sector isn't going to build roads, bridges, tunnels, a new electricity grid, lay broadband lines in rural areas, etc....these are investments in the public interest that don't pay an immediate dividend to the investor.
Just like the interstate highways in the 1950's. There was no immediate return, no private entity could have made a profit by undertaking such a project, but the long term effects on our economy have been profound. (And there is also the short-term benefit of jobs for the people who build the roads, clear the land, etc)

This really made no sense. You're assuming the only reason someone would sell an investment is to pay off debt. You also assume that the bank will turn around and lend new money once an old debt is paid off.

Yet the banks have been given a shit pot full of new lend-able capital by the government, and that hasn't led to more lending. Also, my guess (and it's a reasonable one) is that the money someone would use to buy a stock, or a business, or whatever other type of investment, is currently sitting in a bank and not under a mattress, which means that it is already capital on a bank's balance sheet that can be lent if the bank so chooses.
Nobody has to sell a stock to pay off a debt so the bank can loan again. You really went off the reservation on that one gideon.

Banks not lending is a result of the trillions of dollars in toxic assets on their balance sheets. Cutting the capital gains tax so that someone will sell some stock isn't going to make that problem go away. (Especially considering that stocks have lost almost half their value in recent months, so almost anyone selling right now would be taking a loss and taxes wouldn't be a factor anyways)


The top economists in the country have told President Obama that for every $1 of government spending we'll get $1.50 in stimulus, for every $1 in tax cuts, we'll get 75 cents of stimulus. (Because the tax cut money may not be spent at all, or it could get invested overseas, etc)
The reason for the tax breaks to individuals is more a function of giving people a break during tough times than it is about stimulating the economy. (From Obama's point of view anyways)
Yet there are still all of these people screaming for across the board tax cuts, capital gain and dividend tax cuts, and whining about all of the "wasteful spending" in the stimulus plan.
We've tried the "republican way" for the past 8 years and now we're in the mess we're in, dontcha think it's time to try something different?

Most American don't carry debt? You do ralize that even before this economic crisis that amercians on average had a NEGATIVE savings rate. You can only do that by having debt.

That would be subject to capital gains taxes not income taxes. So if you lowered income taxes that doesn't mean shit to anyone selling an investment.

I was talking about "falling off the cliff" debt like you described.

go back to school boy.. learn your economics 101.

There is soo much more to this, there just isn't enough time to get into it... but

The entire premise of the arguments in this thread assume that anyone who has an investment that qualifies as capital gains will sell it because the capital gains rates are low and then just hord that money away in their mattress. I am not sure where this thought process comes from, but personally I've never come across anyone with substantial money who sells off investments to move into cash.

People with money, move assets from one investment to the other -as they know sitting in cash does not grow their net worth. So lower capital gains rates stimulate capital investment as investors move money from one investment to the other. Some of that money then seeks higher risk, higher return investments (ie. venture capital) and thus stimulates economic expansion through new business development.

it doesnt create jobs period.

At least this was a well thought out and reasonable explanation. Unlike the post above this one in which I was called a "boy" and told to go to school, by someone who doesn't know how to use capital letters.

The thing with what you're saying is that if capital gains taxes are low, then that encourages people to sell off profitable investments and make new ones. At the end of the day though, that's just shifting money from one place to the other so I don't see how that creates any sort of economic "expansion" that would create jobs.

You say that people with money know that sitting in cash doesn't grow their net worth, so then won't their money always be invested in the place they think will give them the highest return, regardless of what tax rates are?

It would seem to me, that lowering the tax rate only affects their behavior in one way. It makes them more likely to sell their investments while rates are low so they will save $$ in taxes, even if they just sell and then reinvest back into the exact same asset.
At the end of the day all this does is cost the treasury money in the long run, it doesn't positively affect investor behavior in a way that is conducive to economic growth.

people writing essays. for what. trying to figure out what they are doing. we're fucked plain and simple.

clueless. and sad