Why lower taxes work
Published: Saturday, March 28, 2009 at 4:30 a.m.
Last Modified: Friday, March 27, 2009 at 9:15 p.m.
To The Editor: While our local Democratic leader asks how tax cuts create jobs, his own letter contains a good start to the answer. He correctly recognizes that we are a consumer-based economy. As such, tax cuts provide consumers with more disposable income. This ultimately leads to increased demand for products and the jobs that create them.
A second, but no less important reason, is the incentive provided to job creators. Starting and expanding a business is a risky endeavor. If an entrepreneur is to assume these risks, he/she must foresee a potential reward. Higher tax rates guarantee a reduced potential reward and, therefore, fewer jobs are likely to be created.
Economics are based on some simple principles which Democrats cannot seem to grasp. One of these is that taxation of an activity will result in less of that activity. Earnings growth in the total economy requires lower tax rates.
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