Does anyone have any resources that prove or disprove this claim? Also can anyone find the articles that show what the Wisconsin Teachers Union has proposed to Walker? I cant not find any 'credible' sources.

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Comment by Tammy on March 2, 2011 at 1:29pm

I was trying to explain tax cuts to my father a few days ago and came across a pretty easy to understand post. Hope it helps.

Tax Cuts Simply Do Not Create Jobs

Taxes are not paid on revenue.

Taxes are paid on profits.

Profits are revenues minus costs.

Labor is a cost.


In any debate on taxes and their effect on business, keep in mind that taxes are only paid on profits. Costs are counted against profits. High taxes are, therefore, an inducement to invest (create deductible costs). Labor is a cost. High taxes are, therefore, an inducement to higher people. Not, of course, at random, but people who will grow the business and increase the value of the business.

Low taxes are an inducement to reduce costs - at whatever cost - and take profits. We currently have low taxes. If the theoretical model above is correct, the result should be high unemployment and high corporate profits. Moreover, profits that are retained. That are not reinvested. Except to purchase other companies. Which is exactly what we have.

Tax Cuts for the Rich Do Not Generate Jobs

There is a lot of research around GDP multipliers and tax cuts. We have on one hand claims that tax cuts generate GDP, economic growth, on the other, tax cuts increase the deficit and in terms of jobs, these tax cuts didn't do much.

Do tax cuts pay for themselves? Do tax cuts create jobs? If so, what kind of tax cuts? For all of the rhetoric it seems few realize about 36% of the Stimulus was tax cuts. From the BEA, there were $120.1 billion each quarter in personal tax cuts from the Stimulus.

A huge part of the problem is how all the tax cuts are lumped together. Take this as an example, Deutsche Bank claims if the Bush tax cuts expire, the recovery will die. Ooooh, scary. Which tax cuts? The top, the middle, the bottom? What about the Stimulus tax cuts?

This is hugely political on the real effect on jobs and the reason is (obviously) GDP multipliers haven't been holding so great by the statistics versus the theory. From the Stimulus, the GDP multiplier for a tax cut to the rich was 0.1. The CBO reported the Stimulus (ARRA) kept the unemployment rate 0.7 to 1.7 percentage points lower and added between 1.7% and 4.5% GDP. So, if this is true, assuredly those results are not from tax cuts to the rich? How do we accurately estimate? Well, if the jobs created during the Bush administration are any measure, it appears other economic factors override the claim tax cuts are correlated to job growth. One thing is certain, tax cuts are correlated to deficits and debt.

Right now we have op-eds claiming tax cuts for the rich are Stimulus, while others are saying take that savings and turn it into real investments via the private sector. Now that is the problem with the original Stimulus, it wasn't directed enough into specific agendas, such as requiring companies hire Americans, invest in America or that Green jobs funds had to be only used in the United States.


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