WP: Link Between Taxation, Unemployment is Absent

[DeepModem Mom]

For the Record
Link Between Taxation, Unemployment Is Absent

By Jonathan Weisman
Washington Post Staff Writer
Monday, March 15, 2004; Page A10


When President Bill Clinton raised taxes in 1993, the unemployment rate dropped, from 6.9 to 6.1 percent, and kept falling each of the next seven years. When President Bush cut taxes in 2001, the unemployment rate rose, from 4.7 to 5.8 percent, then drifted to 6 percent last year when taxes were cut again.

It has become conventional wisdom in Washington that rising tax burdens crush labor markets. Bush castigated his political opponents last week for "that old policy of tax and spend" that would be "the enemy of job creation."

Yet an examination of historical tax levels and unemployment rates reveals no obvious correlation.

"The fact of the matter is, we have much higher rates of employment today than we did in 1954, but our level of taxation is considerably higher," said Gary Burtless, a labor economist at the Brookings Institution. "You simply can't look at total taxation to find employment levels."....


http://www.washingtonpost.com/wp-dyn/articles/A58658-2004Mar14.html

[izzie]

1. Does not seem one thing has much to do with the other.

It is almost how you come at the problem that counts. The results are what you want them to be. Or have I been hearing talk radio to much as that is how they reason. It is like the old saying, raise Min. wage and people lose jobs yet it has never happened but it does not stop the Republicans from saying it. Sounds right when you think about it.Pay more so you will hire less yet it has never worked that way.

[leftyandproud]

2. When something costs more, you get less of it

This is a basic economic fact. Taxes = costing more (time, energy, etc) to work and run businesses for less reward.

Min wage = costs more to hire,hence less people hired than would/could have been otherwise.

If we raised taxes to 98% on employers tomorrow and made the minimum wage $50.00 an hour, you think there would be no effect? More than likely, the unemployment rate would jump to 80% within 48 hours and 99% within a week. The only ones working would be in government, and they wouldn't last long, because there would be practically ZERO revenue to fund government at those levels of taxation.

You really gotta look at the extremes to see the reality of these things...They are harder to notice on smaller scales but taxes do have an effect...Extremely high taxes are a disincentive to workers and to employers.

[RC]

3. When taxes are talked about, usually not much

is said about who or what actually get taxed. Your income at $35,000 taxed at 40% is far different than $250,000 at 40%.
Business are usually in a position to pass their taxes on to their costumers.

It's not so much the rate of taxes, it's who has to pay them. That is the reason Clinton's tax increases worked and bu$h's tax cuts are not.
Basically tax those who have more at a higher rate than those who have less.
This keeps getting lost in any arguments about taxes.

[Moderator]

4. Locking

Here be duplicate. Continue here -

http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=102&topic_id=422439