Isn't this surprising?


Jonathan Weisman is about to become the least popular person at Republican cocktail parties. Why? This article that smacks around their conventional wisdom about taxes and employment.

Link Between Taxation, Unemployment Is Absent (washingtonpost.com): When President Bill Clinton raised taxes in 1993, the unemployment rate dropped, from 6.9 to 6.1 percent, and kept falling each of the next seven years. When President Bush cut taxes in 2001, the unemployment rate rose, from 4.7 to 5.8 percent, then drifted to 6 percent last year when taxes were cut again.

It has become conventional wisdom in Washington that rising tax burdens crush labor markets. Bush castigated his political opponents last week for "that old policy of tax and spend" that would be "the enemy of job creation."

Yet an examination of historical tax levels and unemployment rates reveals no obvious correlation.

(snip)

[S]ome prominent conservative economists, including Harvard University's Martin S. Feldstein, predicted wrongly that the Clinton tax cuts would choke off the 1990s recovery and kill jobs, while the millions of new jobs that Bush said his $1.7 trillion in tax cuts would generate have not materialized.

(snip)

The Clinton tax increase was focused on upper-income households, but it included a sizable increase in the earned income credit for low-wage workers, making it more profitable for them to find and keep jobs.

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