Monday, August 09, 2010

Why Tax Cuts Do Not Create Jobs

Larry Summers on CNN this weekend was asked what would create jobs. His response, "Businesses will add jobs when they cannot serve their current or likely customers with the work force that they have. I get a kick out of people complaining that the Fortune 500 are sitting on $1.5 trillion in cash. A business is not a charity. I don't hire workers just because I am sitting on a bunch of money. I hire workers because I don't have enough workers to make products at the level I need." So much for the whole, "Cut taxes on businesses and increase jobs" line spouted by the Tom Emmers and Tim Pawlenty's of the world.

I have long said that the real way to increase jobs is to cut the PERSONAL taxes of any CEO who creates good-paying jobs -- quid pro quo -- you hire X people to work for you, you get a personal tax reduction. You would see that $1.5T put to use VERY quickly under those circumstances.

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