The rationale that ‘the more you make, the more you spend’ is very true, but it applies to the progressive tax system in the U.S. The impact of higher taxes on the rich, especially businesses, on employment must be considered.
Businesses believe that higher taxes affect their job creation, as it is only when a business grows that it increases its capacity to create more jobs. When Apple Inc. was questioned by the government regarding its legal evasion of taxes, the company said that it generates much employment in the country, and quoted higher taxes as the reason.
It is a fact that businesses create jobs, which help the growth of an economy, but a company hires employees for its growth, not vice versa. For the retention and growth of employees, it is important that a company does well.
Businesses, especially small-businesses, are worried by the policies of the Obama administration. They fear higher taxes will affect their growth and sustenance. Italy and Spain found that cuts in private investment were hurting jobs. Both countries found that their incentive programs for solar energy were affecting job growth. For every job created by Italy and Spain by investment in green energy, around 4.8 jobs and 2.2 jobs were lost due to cuts in private investment.
When taxes were raised for the rich, its effects on employees became a matter of debate. Before making decisions regarding raising taxes on the rich, the government must consider its effect on employment, as it will affect not only the rich, but all income groups.