One of the most enduring myths of conservatism is that lower taxes on the wealthy and on businesses means more jobs. And it’s certainly true at some point when taxes are extraordinarily high, but that situation does not exist. A new study finds that corporations who paid higher taxes created far more jobs over the last few years than those who paid none.
Paying high tax rates doesn’t stifle job creation at the country’s biggest, most profitable companies and low tax rates seem to be more correlated with job losses, according to a new report from the Center for Effective Government.
The 30 Fortune 500 companies that paid the highest tax rates from 2008 to 2010 created about 200,000 jobs from 2008 to 2012, the researchers found. By contrast, the 30 companies with the lowest actual tax rates in that time frame shed a collective 51,289 jobs.
The report compared tax data compiled by Citizens for Tax Justice with employment data from corporate filings with the Securities and Exchange Commission. The tax data include only companies that turned a profit in each of the three years in question. The 30 high-tax companies each paid at least a 33 percent tax rate over the time frame in question, and only eight of them saw a net decrease in employees. In the low-tax grouping, just two of the 30 profitable companies paid any federal taxes, and a full 15 of them cut their payrolls.
This is correlation, not causation, of course. But it fits very well with the long-range data as well, which shows that lowering taxes on the wealthy and on business does not unleash some economic boom. You need only look at the last few years when the stock market has boomed, the wealth of the rich has increased at an astonishing rate, corporate taxes are at their lowest ever and job growth has still been sluggish. It’s time to bury this myth once and for all.