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Why Neither Raising or Lowering Taxes on the Wealthy Affects Jobs

July 2011

  1. The only thing that creates private sector jobs are customers (companies hire employees to meet demand, not because they have “extra” cash).

  2. Customers = employed people; better wages make stronger customers.

  3. Public employee wages create just as good customers as private employees (and loss of public employee jobs creates the same reduced demand).

  4. Reducing taxes on people who already make enough money to buy what they want does not create more demand – they can already buy that stuff!

  5. Reducing taxes on wealthy individuals and companies does not create new jobs (see point 1) it only creates more wealth for the already wealthy.

  6. When private (and public) sector jobs fall below a critical mass of customers loss of demand causes private companies to layoff employees (customers) creating even less demand and more layoffs.

  7. When this happens the government has to create employees (either through government jobs or contracts for public projects) to bring customers back to critical mass, the only thing that can revive the private sector demand.

  8. Raising taxes on individuals and companies that make more money than they can reasonably spend does not slow the economy or affect job growth (see points 1 & 4).

Steven L. Telleen, Ph.D.

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