Tax time, and why we need tax cuts

Since it is April I figure some discussion on taxes might be in order. Democrats in Oregon, particularly Governor Kulongoski could learn a bit from this. If you care about the unemployed you should want them to be able to find a job. If you care about low wage earners, you should want them to be able to change jobs to a job that pays more. A person can only get a job in the first place, or change to a better job when the economy is strong and growing so there are enough jobs. Tax cuts will stimulate the economy and make more jobs available. When there are more jobs available, those without a job can get one, and those with a low paying job can switch. This forces low wage payers to increase their minumum wage voluntarily. THAT is good minimum wage policy.

How do tax cuts stimulate the economy?

Let's use a local restaurant as an example. If the Legislature passed a state income tax cut or reduces a sales tax, residents have more disposable income. More disposable income results in more money being either spent in the economy on consumption, or invested which pays for a provider of a good or service to try to make a profit, both mean more money in the economy AND more tax revenue. Using the example of a local restaurant, that would result in more customers for the business owner, which would lead to more taxes being paid to the state, and potentially more employees who would also being added to the tax rolls. This state and its municipalities have used tax credits and tax exemptions to lure business in an effort to create jobs and increase tax revenue.

If tax reductions don't work, why does the legislature pass special exemptions in an effort to encourage some businesses but not realize that everyone can benefit from reduced taxes?

Tax increases, on the other hand, have exactly the opposite effect on the economy. If a small business owner's taxes are increased, the small business owner must raise their prices to maintain a similar profit. That results in higher prices for consumers, thus each consumer has less money to spend on other things and will lead to less sales and fewer jobs. That's certainly no way to help an economy grow.