Monday, October 5, 2009

Do we need tax cuts to create jobs?

The Economic Policy Institute looked at the impact of personal tax cuts on job creation, especially the tax cuts for the wealthy that conservatives favor. Their conclusion is that tax cuts aren’t an effective way to create jobs. Past experience indicates that only half of personal tax cuts are spent in the first two years. Instead, people use tax rebates to pay down debt, build savings, or buy imports that don’t create American jobs. Researchers at the University of Michigan took a look at the impact of the $100 billion in personal tax rebates that were part of the 2008 Bush administration stimulus. The researchers found that only one third of the rebates were spent. They concluded that the rebates provided “little ‘bang for the buck’ as economic stimulus.”

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