Link Between Taxation, Unemployment Is Absent

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

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."

The issue has become particularly relevant as Congress debates budget resolutions that would extend tax cuts that otherwise would expire over the next five years, and as Bush clashes daily with Sen. John F. Kerry (Mass.), his Democratic rival, over tax policies and job creation. The Senate voted Wednesday night to place new barriers on future tax cuts.

... is the POS Bush administration.

This should give my Repub coworkers some fits. Can't wait to pass it around.

..

when Reagan took office, the economy was in the shitter: he didn't help it much BUT he started taxing unemployment benefits!

I guess he saw it as a huge wad of tax resource.

Tut-tut

It almost sounds like it is saying that tax INCREASES produce jobs.

they create public sector jobs directly. they create private sector jobs indirectly. tax money doesn't disappear. much of it goes to inefficient military projects and defense contractors, though that creates jobs too. and some of it goes toward implementing social policy, and maintaining infrastructure. those create jobs, just like they do when you leave more of the money in the private sector. only, when the money is in the public sector its handlers are accountable (to varying degrees) to the voting public. in some cases, it may be "less efficient" than the private sector would be (for some definition of "efficiency".) but then again, bureaucracy crates jobs too.

Supply doesn't lead to demand, demand leads to supply.

People will invest their money if they believe they will get a return.
They don't need low tax rates to convince them.

Reagan cut taxes, then raised them. Bush senior raised taxes, then Clinton raised taxes, and we had the booming '90's. What more evidence
do the supply-siders need ? Trickle down economics is dead.