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How does Tax cut related to Unemployment?

L

luvya

Banned
Maybe someone could help me out with an explanation or graph? I learned it years ago but kinda forgot the concept already. I am thinking as following:
When T goes down, people have more $$ so they tend to spend more, therefore, drive up the demand curve, to meet the higher demand curve, supplier has to increase the supply, hence they have to hire more people, therefore, unemployment rate goes down. The logic works for me, but what do you guys think of this topic?
 
And, when you have a tax cut that affects the top end of the tax bracket, you give businesses (proprietorships in specific) more money to hire people with.

5% of $1 mil/yr = 1 $40k/yr job including benifits.
 
Sounds logical but it doesn't always work this way. The demand may have always been there to but the people were just not willing to spend the cash.
 
People have to put their money someplace. Whether they spend it or stick it in the bank it is being used to creat jobs. More jobs equals more tax revenue.

Peace

Mike
 
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