How do lower taxes create jobs?

Answer 1

The theory is, that if companies have to pay out less of their intake as taxes, they will use the money they save to hire more workers.

In reality, the extra money goes to shareholders as dividends, and to upper management as bonuses.

The rich get richer, and the poor are still earning minimum wage and not earning enough to live on.

Answer 2

In general the theory is that lower taxes makes available more spendable income. If spent or re-invested demand for products is created requiring more employees to produce them. more employees means mre income and more tax ( at a lower rate on a greater tax base)

Contrast that with another theory which says that government spending creates jobs which creates income which increases tax which alow for more job creation.

The truth, as always, will be far stranger.

Answer 3

Even if the money goes to shareholders, it still creates more jobs by being available for the shareholders to spend. The places the shareholders spend their money will have more business and need to hire more employees, creating more jobs. More money spent is more sales and higher profits, leading to more taxes paid at the same rate. Win! Win! Win!

Answer 4

Reducing tax rates allows people to keep more of each additional dollar they earn. This is either invested or spent. If it is spent, the companies that provide whatever it is spent on expand and hire more people. If it is invested, the businesses in which it is invested expand and hire more people.