How does raising taxes stimulate the economy and increase job growth?

It doesn't that is just a myth politicians use. In a repressed economy they collect less tax revenue. Less money means less power & influence. And they consider that unacceptable.

Every dollar the government spends draws from the economy. It does not contribute to personal wealth of citizens (on which our system depends).

Maybe you could explain it this way.

How will lowering taxes reduce the budget deficit?

Your Democrat friend is probably just trying to reason with you in a friendly way. But you seem to be of a mind that taxes are inherently evil.

I hope I'm not jumping to a premature conclusion.

But taxes have been lowered 30 years ago - and our economy has never really returned to the days when we were an economic POWERHOUSE --- say between 1950 and 1975.

Interestingly - the upper income tax rate in 1950 was 91% That's NINTEY PERCENT.

In 1975, the upper income tax rate was 70% ... That's SEVENTY PERCENT.

It was Ronald Reagan who reduced the tax rate to 50% for the top earners. He did that in 1981.

However, he subsequently RAISED taxes 3 times (by lowering the top bracket each time).

When Reagan left office, tax rates were 28% for the High Income Bracket ... BUT .... the top bracket was anyone who made more than $28,000!!!

(When he came into office, the top bracket was $212,000!)

I hope I haven't ranged to far afield for you. I know this is a lot of information. And a lot of it gets to the heart of the hyperbole about Reagan-omics or "Trick-le-Down" Ecomics" ... or "VooDoo Economics".

I guess the point is - for those folks whining about taxes being too high for the high income earners - one must gain some perspective and realize that these current tax rates are at historic lows - and look at our economy - it's worse then it's been in 70 years.

Does anyone in their right mind think LOWERING taxes will help?

What helps an economy is IDEAS. ... Like the Internet in the 90's.

The dirty truth is, and don;t hate me for being the messenger, raising taxes doesn't stimulate the economy... It does the opposite as you can figure out since people have less money in their pockets...

The dirty truth is that the powers that be don't want to stimulate the economy...

In times of economic recession, money doesn't disappear. It just exchanges hands...

from the hands of the poor and middle class into the hand of the rich.

They love recessions and are doing everything they can to make it last...

WE!? You mean the government? they could desire to diminish the federal spending! the only element it is going to do for us, and it is not of any earnings to us, will probably reason us to unfastened or walk faraway from our residences while they advance the taxes! what's the use or the area of having a countrywide wellbeing Care Plan, if we gained't discover the money for this "low-priced" insurance!!! NOONE is going to benefit from it - and that i will see employers final their doorways cos they are going to be interior the purple after paying the taxes!!! This government has have been given us into lots debt, I doubt if we are able to EVER be waiting to pay the loans off in chilly annoying money!

Let's turn it around so that the republicans are in the driver's seat. Bush43 cut taxes. He put millions of people out of work, destroyed the economy, and declared that "deficits don't matter". Why didn't cutting taxes "stimulate the economy and increase job growth"?

when there is a recession it means that there is a shortage of liquidity in the economy:

simple!!! if you have $10 and the great mr.Obama asks you to pay $5 in taxes then what will you eat????

on the other hand if he reduces the taxes to $2 then you are more comfortable and you start spending more on luxury goods and then business improves and the economy improves.

Yes, it will, long-term, by returning States and the US to a sound financial footing. When interest rates rise virtually all political entities in the US will go broke. We must pay down our debt. By continuing to run deficits ("tax cuts") we simply kick the can down the road for our children to address.

The answer is spending cuts and tax increases. All other solutions are lies. Sen Owl Face is taking his last bite of the apple for his contributors, at your children's expense.

EDIT to Sanjay: there is NO liquidity shortage. Banks are paying near zero on day of deposit to day of withdrawal accounts because they have no use for them. We have so much liquidity in the system we are drowning in cash - the interest rates reflect that. A liquidity shortage would elicit higher rates.

How else are budget problems to be solved without raising taxes? Really theres no other way.

And if the debt grows obscenely large (e.g. Greece) that could have disasterous economic consequences far worse than raising taxes.

YO! You want your trash collected, your neighborhood policed, your street kept clear of snow, your house protected from fire, your mail delivered, your food and medicines pure and unadulterated, your kids educated and your community's sewers capable of flushing your turds? These things all cost money, and you have to pay your share.

You want more jobs? Then talk to your Republican Congress-critters who allow American business to export jobs overseas and give them tax breaks for doing so. Talk to those same creatures about how they allow American businesses to do their banking overseas so as to avoid domestic taxes. And while you're at it, ask 'em about corporations that pay NO taxes whatsoever being given a tax REFUND!

Yo, I ain't paid my 2010 taxes - do ya suppose I'll get a refund?

NOW do YOU understand???????????????????????????????/

Raising Taxes will the government raise more money that will be used in Stimulus program that has been credited with keeping the economy expanding.