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Tax cuts do not cause “job creators” to hire more people or to invest in equipment, because the after tax cost higher. For example, the net cost of a $10,000 item is $8,000 when the tax rate is 20%. When the tax rate is 40% the after-tax cost is only $6,000, and more likely to pay for itself. A piece of equipment (or an employee) needs to bring in more revenue than they cost, and this is less likely to happen with a lower tax rate. However, when poor and middle class households get money, including from tax cuts, that money is much more likely to be immediately spent, stimulating the economy.

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