Tax Cuts For The Poor And Middle Class -- Not The Rich -- Create Jobs, Research Shows
Source: INTERNATIONAL BUSINESS TIMES
By Cole Stangler @colestangler on April 22 2015 12:18 PM EDT
The exact link between tax cuts and job growth has for years been a matter of fiery debate, from college economics departments to the chambers of Congress. Now, a working paper from the National Bureau of Economic Research could add some nuance to the dispute: Tax cuts do, in fact, boost employment and investment, just not when they’re directed at the rich.
The study from Owen Zidar, a professor at the University of Chicago Booth School of Business, found that tax cuts aimed at the top 10 percent of earners produce little stimulative effect on the overall economy. On the other hand, those aimed at the bottom 90 percent have a greater impact.
Zidar examined the short- to medium-term impact of tax changes at the state and federal levels going back to 1948. On the national level, he found a 1 percent gross domestic product (GDP) tax cut aimed at the bottom 90 percent translates to job growth of 2 to 5 percent, but the impact of a similar cut on the top 10 percent of earners has a negligible effect. He reached similar conclusions on the state level: Tax decreases for most of the population generated 5 percent employment growth, but yielded little change when applied to the top income bracket.
Tax hikes produce similar effects, the paper says. When applied to the rich, they’re insignificant. But when applied to the rest of the population, they have a negative effect on economic activity.
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Read more: http://www.ibtimes.com/tax-cuts-poor-middle-class-not-rich-create-jobs-research-shows-1892251
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Unfortunately in modern America both Dollars ultimately end up in that same tax shelter. It just takes the middle class Dollar a little while longer and it does some good along the way.
