Taxes and Jobs

Everything is changing.  People are taking their comedians seriously and the politicians as a joke.

We see this happen every day, but this is not my original observation.  For one thing, I have never taken a comedian seriously.  Credit for the anecdote goes to the American actor Will Rogers.  His thought seems relevant and on-target today, even though Rogers died in 1935, making his comment most of a century old.

Rogers apparently had a sackful of these worldly observations; two others that I have dug out of that bag set the stage for today's writing.  Here they are:

• Everyone is ignorant, only in different subjects.
• The income tax has made more liars out of the American people than golf has.

Today's ignorance issue for me is the subject of income taxes--let's just shorten it to "taxes"--and job creation by American businesses.  This now is my blatant admission of ignorance on how the manipulation of tax rates, either up or down, can or does or will have an affect on the creation of new jobs.  My ignorance on this subject is made even more abject by the fact that not only does the "how" of it elude me, but also the "why" of it does, too.  The truth of it is that I now grope about on this subject largely because I once thought--many long years ago--that there was an obvious connection between the two in that higher taxes meant fewer jobs; and then at a later time it seemed equally obvious to me that there was no such connection; and now today I stumble across a veritable truism that calls into question the veracity of every scrap of evidence on this subject for the last one hundred years or more.  My head is spinning.

The national economic debate seems to have come down to this:

• Mr. Obama (speaking for the Democratic job creating proposal):  Let's do these things, they will cost this much, and they get paid for by raising some taxes on the highest-earning people--those with annual household incomes exceeding $250,000--in the country.
• Mr. Boehner (speaking for the Republican opposition to this plan):  We can't do these things, because they cost something, and raising taxes on those highest-earning people reduces the number of jobs, so we can't pay for them that way.

(To be fair, both have said many more things, too, but it is enough to address ignorance of subjects on a one-a-day basis.  Taxes is today's subject.  There will be other such subjects for other days.)

Well, the best jokes have some facts within them, so I went looking for facts related to taxes and jobs.  The results are provocative.  Here they are, summarized by recent Presidential administrations, and sourced from publicly-available documents as described in earlier writings:

• Bush the First -- taxes were the legacy of the very confusing "Tax Reform Act of 1986;" unemployment rate increased from about 5% to about 7.5% before declining to about 7% by the end of his term in office; total non-farm jobs increased slightly from just below the 110 million mark to just above it.
• Clinton -- taxes higher; unemployment rate continued the decline mentioned above, ending at about 4%; non-farm jobs increased from the 110 million mark to about 130+ million.
• Bush the Second -- taxes lower; unemployment rate increased to above 7%; non-farm jobs increased to a record 140 million before ending at about the original 130 million figure.
• Obama -- taxes constant; unemployment rate higher, now at 9.1%; non-farm jobs pretty close to the same as where they were at the end of the prior Administration.

So. . .looking for the humor here, not finding any, but also not finding any evidence in recent history to support the idea that higher tax rates on upper-income taxpayers do in fact hurt job creation.  You probably already knew this, but it looks like the best period for job creation, even with higher tax rates, was during the years of the Clinton administrations.  If the lower taxes of the Reagan and Bush the Second legacies have caused meaningful job creation--and if the record of that job creation does not suffer when compared to the corresponding jobs record and higher taxes of the Clinton years--then it is not clear to me how to articulate the facts of such success.

Such is my ignorance at this point that I beg for an opposing view.

Out of consideration for the Right Wing readers--and I know that there are some--I will admit that the Reagan years had some pretty impressive job numbers, but so did the Carter years and so, too, during the other Presidential Administrations, back to the days of Eisenhower.  And, as we go farther back in time, the comparisons of the tax situations become murkier, and the economic conditions so much different from what they are today that making meaningful comparisons goes beyond the time available today.

There's more to this whole taxes and jobs thing that what is contained here at this moment.  Here's my gripe:  relevant evidence from our national experience ought to be a part of the public discourse on this subject; sadly, it is lacking.  Here's my suggestion:  let's continue to do small things like what is done here to help to fill that gap.