Will reducing taxes create a lot of new jobs?

(FAQ: Frequently Asked Questions)

Will reducing taxes create a lot of new jobs?

No, reducing taxes will not create very many new jobs.

Traditionally, reducing taxes was one way to stimulate the economy
and create more jobs. When taxes were reduced, companies and
people had more money to spend.

With less taxes to pay, companies could afford to build more
factories, invest in more research, develop new products, etc.

Companies would hire workers to build the new factories, do the
research, and develop the new products. And these newly hired
workers would spend their money on goods, creating even more
demand for goods produced by factories.

When people had their taxes reduced, they would have more
money to spend on goods.

As people increased their spending and purchased more goods, our
factories would have to hire more workers to meet the increased
demand.

And these newly hired workers would also spend their money
buying products, creating even more demand for the factories to
increase production.

Reduced taxes would stimulate the economy as the money that had
once been paid as taxes to the government, was now spent by
companies and consumers to purchase goods and services.

The additional money would now recirculate through the economy
instead of going to the government as taxes.

As this money continued to recirculate throughout the economy, a
sustained increase in economic activity would result in more jobs for
the American workers.

But, reducing taxes today will not do much, if anything, to stimulate
the economy and create new jobs for American workers.

The reason is that we have sent too many factories to China and
other foreign countries.

If Americans get more money to spend because of reduced taxes,
the money will be siphoned off and sent to China to pay for
imported consumer goods.

When Americans buy more new big-screen TVs, the money goes to
a factory in China, not a factory in the US.

The factory in China gets more demand for their TVs and increases
production, hiring more workers. This increases jobs in China, not in
the US.

The money sent to China does not increase or sustain economic
activity in the US.

So, reducing taxes will not do much to create jobs in the US.