Labor Participation and Taxes

By Tom Haughey

The logic of the tax cut is that if businesses have more money they will expand and hire additional workers. At the same time, the unemployment rate is hovering at just four percent, one of the lowest levels in American history. How does that work? Where are all these new workers coming from who will get jobs, pay taxes, and prevent the tax cut from resulting in that trillion-and-a-half of additional deficit spending over the next 10 years (which critics of the Administration are predicting)? Republicans say they will come from an increase in the labor participation rate which now comes in at just over 62 percent.

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