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To: Polybius
I don't think the tax cuts were designed to aid small business - first because no tax cut could offset the differential in wages, second, because there's no evidence of an increase in private sector jobs (if the article is correct), third because the bulk of the tax cuts benefitted very high income individuals.

I think the cuts were designed to allow this last group to invest as wisely as they could which will allow America to obtain as large a sector of world production of goods and services as possible. It seems that this strategy worked because tax receipts are up even though domestic private sector employment isn't.

I don't think there was any other way to stimulate the economy.

The down side is that the pressure on compensation for American workers (wages plus benefits) increases.

68 posted on 02/01/2006 8:27:56 PM PST by liberallarry
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To: liberallarry
I don't think the tax cuts were designed to aid small business -

Whether that is the case or not, as a small business owner, I'll take whatever I can get. :-)

first because no tax cut could offset the differential in wages,

However, the tax reduction increases the profit margin of doing business and that compensates, to some extent, for the higher labor costs in the U.S.

second, because there's no evidence of an increase in private sector jobs (if the article is correct),

The article said that there was a "sluggish growth".

In science, you cannot measure the effect of one variable unless you keep the other variables constant. For all we know, without the tax cuts, the number of private sector jobs could have taken a nose dive instead of having "grown sluggishly" as a result of the other variables such as rising oil prices and rising interest rates.

third because the bulk of the tax cuts benefited very high income individuals.

Define "very high income". Am I included in that category?

Are there not hundreds of thousands more small business owners than there are Donald Trumps or Bill Gates?

I think the cuts were designed to allow this last group to invest as wisely as they could which will allow America to obtain as large a sector of world production of goods and services as possible. It seems that this strategy worked because tax receipts are up even though domestic private sector employment isn't.

According to the article, there was growth in job creation.

Small businesses • Represent 99.7 percent of all employer firms. ..... • Employ half of all private sector employees. ..... • Pay 45 percent of total U.S. private payroll. ..... • Have generated 60 to 80 percent of net new jobs annually over the last decade. ..... • Create more than 50 percent of nonfarm private gross domestic product (GDP).

71 posted on 02/01/2006 10:04:36 PM PST by Polybius
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