Employment and Taxes: What is their Relationship?

Last updated on August 21, 2022

Any discussion regarding a tax increase on the rich always includes its affect on employment because it is believed that it is the rich who provide employment. The importance of employment cannot be undermined and its relationship with taxes must also be considered before introducing any tax increases.

When President Obama declared that taxes on the rich would be increased, it was speculated that it will lead to mass layoffs. Fortunately, it did not even affect spending. Presently, there is speculation that taxes might be increased on private investments. It is making small businesses unhappy, as they believe it will hit them the hardest. Small businesses are quoting a statistic that claims they provide 60 percent of the country’s employment, and increased tax on private investment will force them to hire less.

T.J. Rogers blames government spending for the economic crisis. He says that “since 2000, the economy has staggered under the record government spending and deficits of two presidents, George W. Bush and Barack Obama. The result of that spending spree has been lower real wages and higher, more-persistent unemployment.”

President Obama’s policy included cuts in government spending to accelerate the growth of the economy, but he also included an increase in taxes. The relationship between employment and taxes is sensitive and it must be tackled delicately by the government.