Job Creation Incentive

Politicians talk about providing incentives for job creators or reducing tax burdens for job creators.  Why should reducing taxes provide incentive to create a job?  In the not too distant past, my business partner and I hired some people to help us complete our project contracts.  Apparently, the act of hiring people made us job creators.  Interestingly, a reduction in our tax burden did not enter into the decision to hire help.  Actually, a tax increase was expected because we anticipated greater business revenues, which we hoped would result in greater profit for my partner and me.   

This type of job creation was expected to be good for our business.  Our employees expected to earn money to pay their bills and enjoy their chosen life styles.  The taxes that we paid contributed to the tax revenues of local, state, and federal governments.  It isn’t as though we enjoyed paying taxes, but we expected to pay them and accepted this as contributing members of our society.  We didn’t become wealthy from out endeavors, but we did seem to be making a living from the arrangement.

With the help of our employees, we were able to take on projects that my partner and I could not have done with the same ease, speed, and efficiency without the help of our employees.  Not always, but some of the time our company showed a profit over our cost of doing business which probably resulted, at least some of the time, from the efforts of our employees alone.  This is a normal occurrence and it would seem to be the greatest incentive to expand the work force of many businesses.

Business owners and employees don’t just contribute to tax revenues; obviously, they contribute to the economy at large by paying for housing, buying groceries, buying cars, etc.  This demand for goods and services creates business opportunity which results in demand for labor (more jobs).   The taxes generated by this economic activity can then be used to provide public goods and services like roads, parks, libraries, police services, fire protection services, schools, military defense, etc.

When tax reduction is offered as incentive to create jobs it does benefit the general economy in the way just described.   A bigger slice of the pie has been allocated to one group of people at the expense of others in the economy.  Some tax break legislation does not even require proof that new jobs were actually created.  Unfortunately, many times it is only the wealthiest people in our society that are able to benefit from the tax breaks offered as incentives to create jobs.  Corporate lobbyists have convinced politicians that only large corporations can improve the economy and that the public, the 99%, must pay to make this happen.

Consider why businesses exist.  Most small businesses exist for the purpose of providing a living income for their owners.  Profits beyond the living income or living expenses are secondary to the purpose of the business.  Large corporations exist to create profits beyond expenses.   Which type of business benefits our economy the most, one that pays its own way or one that requires society to pay it to operate?