Why Tax Cuts for Businesses Don't Create Jobs

Fiscal conservatives argue that if you cut taxes on Business, they will hire more employees. The problem with that logic is that businesses don't hire people because they have more money. In fact, the opposite may be true. Businesses will be less incentivized to grow their way out of a rut if they receive money for doing nothing. In fact, this is the very argument against welfare for the poor - no incentive to work. And while everyone appreciates free money, most who already have enough would just as soon add it to their stack, say thank you very much and continue waiting for the recovery. After all, the rich didn't become rich by spending all their money (or letting it "trickle away" from them for that matter)!

So again, businesses don't hire people because they have money, they hire people because they have more work than people to perform that work. And they have more work because people buy their products and services. And people buy their products and services because they have some but not too much discretionary income (at some point extra income is better spent working for you than in buying extra things you don't need). And just who are these magic people? Why, the working class and middle class of course!

To make a long story short, if you give money to households earning less than $100,000, they typically spend it; sometimes out of necessity and sometimes just for the intangibles that make life bearable (fashion, entertainment, hobbies, etc). The businesses that provide these services ultimately benefit and soon need more people to provide these services, which gives more people money to buy more things, and the virtuous cycle continues.

The beauty of this approach is that as you give tax breaks to those who spend it, you have fewer people relying on services formerly funded by those tax dollars since their spending undeniably creates jobs. I shall call it "up yours economics" - a nice jest to those who formerly "trickled" down our backs and called it rain.

I think Henry Ford said it best: "It is not the employer who pays the wages. Employers only handle the money. It is the customer who pays the wages.”