Raising Taxes Isn’t A ‘Kiss of Death’ for Employment Growth, History Shows

by Ben Hoffman

Cutting taxes creates jobs, and raising taxes destroys them. That’s the view of policymakers, from President Barack Obama to his Republican adversaries.

Evidence from the last two decades, however, suggests that conventional wisdom is wrong.

In the five years after a $241 billion tax increase in 1993, which Republicans criticized as the largest ever, the U.S. economy created more than 15 million jobs and grew at an average annual rate of 3.8 percent.

In the five years after President George W. Bush’s 2001 tax cuts — which reduced marginal rates, raised the child tax credit, phased out the estate tax and gave “marriage penalty” relief to two-income households — the economy added about 6.5 million jobs and grew at an annual 2.7 percent pace.

In December, when Obama agreed with congressional Republicans to extend Bush’s lower rates, he promised they would “help grow our economy and create jobs.” The president and congressional Democrats now say they want to reduce the deficit with a “balanced approach” of spending cuts and tax increases on the wealthy. Republican leaders reject any higher taxes.

Read more…

When right-wingers claim that Obama’s policies aren’t working, they’re really saying that their policies aren’t working.

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2 Comments to “Raising Taxes Isn’t A ‘Kiss of Death’ for Employment Growth, History Shows”

  1. It’s sad to see how this has become the holy mantra in America. When the economy was booming back in the forties and fifties the top income tax rate hovered around 90%. How can they explain that?

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