Pawlenty's Tax Cuts Won't Boost Jobs
During the Q&A session of Pawlenty's economic policy speech Tuesday in Chicago, he was asked a simple question: why do we need even more tax cuts? The questioner noted that Pawlenty's tax proposal would be the third generous tax cut towards the wealthy in recent history, and added: "if there's a tax war going on, who’s winning that war?"
Pawlenty's answer was not inspiring. Pawlenty seems to be trapped: he wants his economic policy to generate jobs, and he can articulate what is holding back job creation. However, it's simply not clear how retaining tax cuts on high income earners solves the problems that Pawlenty identifies.
The crux of Pawlenty's argument is that there is a small class of entrepreneurs who need to be given the right tax incentives to provide these jobs:
There's about 5% of this country who are our entrepreneurial class … if that 5% becomes 6%, 7%, 8% or 9% then we have a bright future, and if that 5% becomes 4% 3% or 1%, we're in deep doo doo, we're in deep crap.
And what does this entrepreneurial class need to grow and hire people? It seems that Pawlenty has a good list:
it's about what are those things we need to do make it more likely that businesses are going to start, grow, add employees, buy capital equipment, build buildings, conduct research, and do all the things it takes to keep a private economy going.
And what's holding them back? Sometimes it’s taxes, other times it's regulations:
Some of them talk about taxes, some of them talk about regulation, some of them talk about the slowness of permits, some of them talk about energy costs.
This is all very specific stuff, but this goes back to the original question Pawlenty was asked, why will lower taxes on upper-income earners help create jobs? What does that have to do with higher energy costs or slow permits?
Pawlenty rejected the argument that this debate is about income as opposed to job creation: "I reject the premise that is about nominal measures of who gets wealthy." If so, then he needs to figure out how his policy proposals deal with job creation.