The reverse also occurs when the economy is growing, rather than shrinking. And this is where the GOP has gotten it all wrong, and why the Obama administration errs grievously when it buys into the Republican orthodoxy of hunkering down; worrying more about an increase in the budget deficit and national debt than unemployment.
Save for taxation that strangles, businesses hire in order to meet current or anticipated demand. Perhaps an example will help.
Say you have a house that is badly in need of general repair and updating; a new roof, some foundation work, replacement of the water heater and furnace, and a new kitchen. You've reached agreement on price and terms with a reliable general contractor to have the work done. The general cannot do all the work himself. He's going to have to rely to a great extent on others; suppliers, sub-contractors, and their employees. If, because of the economic downturn they are presently without the requisite workers, they'll have to go out and hire them. Regardless of whatever the tax structure is, save for that strangling scenario, your demand for their services will compose the underlying demand for a workforce. Reducing their tax rate to zero will not encourage them to hire even one more person than is needed.
Essentially it's as simple and basic as that. Nor does it matter much whether the business is a mom-and-pop venture or something much (even WAY much) larger. If the demand is either present or anticipated for a product or service, the supplying business will make the investments in labor and equipment that are necessary.
With the surfeit of documenting data available, further amplification of the above, concerning the terrible and unaffordable waste wrought by them, wasn't needed by HuffPost's --Patriotic Millionaires' Describe What They've Done With Their Bush Tax Cuts" article.
As to the profligate waste, " The tax cuts enacted in 2001 and 2003 overwhelmingly benefited the richest 1 percent of taxpayers, according to the nonpartisan Tax Policy Center, a joint project of the Brookings Institution and the Urban Institute. The progressive Center on Budget and Policy Priorities estimated in 2009 that the tax cuts "added about $1.7 trillion to deficits between 2001 and 2008.'" That's between 2001 and 2008! According to Citizens for Tax Justice president Bob McIntyre, "If they are fully extended, they will cost five-and-a-half trillion dollars over the coming decade ." (Emphasis mine)
But the article asked what the beneficiaries of the tax cuts were doing with their tax bonuses? Paul Egerman, founder of eScription, a medical transcription company, claims he's likely saved several million dollars because of the tax cuts, but that he's "not done anything with that money." He's "kept it."
Dennis Meheil, chairman of U.S. corrugated, Inc., a cardboard box company, said he "got a bigger boat." Unfortunately, the building of the 150-foot sloop didn't add a single American job, as it was built in Italy.
(Note: You can view every article as one long page if you sign up as an Advocate Member, or higher).
