In the Milwaukee Journal Sentinel's latest man bites dog story Katelyn Ferral writes:
More than 65% of Midwest chief financial officers and senior comptrollers said cutting corporate and personal income taxes is the best way to create jobs, according to a national survey conducted by Grant Thornton this month.
Thirty-five percent of those polled said cutting personal income taxes would be most effective in creating employment opportunities, while 32% said cutting corporate tax rates would best allow companies to hire.
What will the MJS tell us next, that alcoholics prefer beer to sparkling water?
Economic policy, including tax policy, should be based on facts not opinions, even those of highly paid CFOs.
The United States enacted the largest tax cut in its history in 2001 ($1.3 trillion) and followed that up with additional capital gains and dividend tax cuts in 2003.
The total value of the 2001-2003 tax cuts was $1.8 trillion.
More than 50% of the $1.8 trillion tax cuts went to the richest 1%, CEOs and CFOs included who averaged over $900,000 annually.
The result-the weakest job creation of any post World War II business cycle.
If cutting top marginal income rates led to job creation we should have had a job boom. Instead we had the opposite. And a large proportion of the private sector jobs that were created (finance, real estate and construction) were the result of the housing bubble. Once that burst all of those jobs were eliminated.
We experienced much greater job growth during every other post WWII business cycles, including those in the 50s, 60s, 70s and 90s, when the top marginal tax rate was significantly higher than it was during the 2001-2007 business cycle.
High income personal income tax cuts, such as the 2001 tax cuts or those advocated by the CFOs, are weak economic engines because high income earners are less likely to spend their additional income than less affluent people.