More Jobs = More Tax Revenue
WASHINGTON – In 2003 President Bush signed into law the Jobs and Growth Tax Relief Reconciliation Act (JGTRRA). The legislation cut income tax rates, reduced the capital gains tax rate by 25 percent and substantially reduced the double tax placed on dividends. Immediately following the tax cut, economic growth, job creation, stock prices, dividends, and personal income skyrocketed. The 2003 tax cut has been an unmitigated success and should be extended.
There has been much hand wringing by pro-tax forces over the “cost” of tax cuts. However, the most effective way to increase tax revenue is to encourage greater employment. We have previously demonstrated that the tax cuts lowered the cost of capital by 17 percent which increased investment and led to the creation of 4.7 million new jobs. These new workers are now paying taxes. The chart below clearly establishes the correlation between employment and federal income tax revenues, and furthermore shows that both have been on the rise since the tax cut was implemented.
Congress needs to extend the lower tax rates on dividends and capital gains.
More Jobs = More Income Tax Revenue