ABSTRACT
This chapter presents a review of the literature on taxes and employment. Many nations today face a political debate between a right that wants to cut taxes and a left for whom this is a lesser priority. The right and the left also disagree about the size of government. The right wants to shrink big government. The left, generally on the defensive, is trying to maintain traditional levels of government services in areas such as supporting education, providing a social safety net for the distressed and building infrastructure. Conservatives justify their position intellectually on the grounds that cutting taxes stimulates long-term economic growth and creates jobs. The Advocates of cutting taxes can generate impressive-looking statistical equations that make it seem like high taxes are linked to lower employment and lower growth. The bottom line is that there is neither convincing theoretical nor empirical evidence linking tax cuts to job growth.
