Tax Cuts Will Not Drive Innovation or Job Creation

I’ve said it before and I’ll say it again, contrary to popular belief amongst the far right, cutting taxes won’t make the economy grow.  The basic facts speak for themselves. High-end tax cuts haven’t trickled down as job creation, at least they haven’t created jobs that provide a decent wage. The only things trickling down during the last six years of tax and benefit cutting have been  economic meltdown, foreclosures, unemployment, business closures and yet more budget cuts.  From a high-level perspective, the myths created by the far right haven’t come to be. On a more granular level, a large portion of this stems from the realities of how small businesses operate and the needs they have.  But then, the Republican agenda is not in fact about job creation, small business development or entrepreneurialism.  It’s about providing benefits for the elite.

Contrary to myth, most small business owners will tell you that their  tax rate doesn’t affect hiring. If they think I can do more business, they hire more workers regardless of the tax code. The costs of finding, hiring and paying new employees are business expenses. They’re deducted up-front from the taxable income of the business.

Fewer than 3 percent of taxpayers with any business income have yearly incomes above $250,000 (couples) or $200,000 (individuals). Most high-enders aren’t who you think of as small business owners. They include hedge fund managers, CEOs getting paid to sit on the boards of a variety of corporations and partners in wealthy real estate or law firms. These are the people whining that eliminating tax cuts will kill jobs at small businesses. They do not represent the majority of small business owners. Nor do they represent the bulk of job-creating businesses for the bulk of the population.

If Congress wants to help my company create jobs, it should support policies that strengthen our economic foundation and boost broad-based consumer income and spending.  More important than tweaking the tax code YET AGAIN is the need for stability in the system. Nothing scares small business owners more than a fickle market.  Today’s plummeting of the Dow is far more detrimental than closing loopholes and taxing the richest 5%.  The poor and the middle class are expected to sacrifice, the super-rich are not.  Small  businesses and the people they employ take the hit.

More tax cuts at the top won’t create jobs. But we will create jobs and strengthen our economy by rebuilding our crumbling roads, bridges, public transit, levees and water and gas pipelines.  In other words, if we invest in innovation, we will create jobs and stability. We won’t heal our economy by repeating the toxic policies the right is so in love with.


Published by gavinjohnston67

Take an ex-chef who’s now a full-fledge anthropologist and set him free to conduct qualitative research, ethnography, brand positioning, strategy and sociolinguistics studies and you have Gavin. He is committed to understand design and business problems by looking at them through an anthropological lens. He believes deeply in turning research findings into actionable results that provide solid business strategies and design ideas. It's not an insight until you do something with it. With over 18 years of experience in strategy, research, and communications, he has done research worldwide for a diverse set of clients within retail, legal, banking, automotive, telecommunications, health care and consumer products industries.

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