Higher Taxes Lead to More Jobs

[eridani]

http://www.counterpunch.org/2015/01/16/higher-taxes-lead-to-more-jobs/

Countries that provide more subsidies toward services that are complementary to work — such as child care, elder care and transportation — have higher workforce participation rates. This shouldn’t be surprising as we don’t leave the rest of our lives behind when we go to our jobs, however much bosses insist we should. Such a finding can only be controversial in a world dominated by ideologies that insist that conditions be made as harsh as possible to “force” people to work.

Alas, such a world is the one most of us live in, particularly in the English-speaking advanced capitalist countries. I have often noticed that the thinking of middle-class conservatives often boils down to “I had to suffer, so everybody else should have to suffer.” I’ve heard words to this effect from many conservatives. Although people who have enunciated that to me often are people who did indeed work hard to rise from modest circumstances, the reductionist hyper-individualism it reflects is blind to the social solidarity necessary for society to function.

More subsidies lead to a higher percentage of working-age people holding regular employment, and these subsidies are possible through higher taxation. Contrary to orthodox economics, higher rates of taxation lead to more employment. This is the conclusion of a study by Henrik Jacobsen Kleven, “How Can Scandinavians Tax So Much?” Professor Kleven, a professor at the London School of Economics, compared Denmark, Norway and Sweden with other OECD (Organisation for Economic Co-operation and Development) countries (a club of the world’s advanced capitalist and some of the largest developing countries) and found strong correlations between taxation rates and workforce participation.

Plotted on a graph, there is a steady progression of countries with higher “participation tax rates” having greater percentages of their population employed. This pattern, not surprisingly, is even stronger for women than men. The author defines a country’s “participation tax rate” as the average effective tax rate when including all income and consumption taxes, and public benefits. This rate is far higher in Denmark, Norway and Sweden than it is in, inter alia, the United States, Japan or Britain. Professor Kleven writes:

[MisterP]

1. and corporations stuff it into R&D like Bell Labs or the PARC, instead of stuffing it in the Caymans