Consumer purchases can be boosted by tax cuts, livable wage laws and higher wages for workers in general. The last thing you would want to do is give consumers indirect tax increases by lowering business taxes (the revenue loss must be made up by higher taxes for those not included in the incentive) or by taking consumer tax monies and literally handing them over to businesses to do with as they please. In addition, consumer financed subsidies for businesses interfere with the free market by artificially supporting weak businesses rather than letting the marketplace determine which ones produce a desirable good or service.
Each dollar spent by consumers requires someone to invent, manufacture, package, ship, advertise and display the item purchased. For services, each dollar spent has the ripple effect of supporting technical or professional training, office space for the rendering of the service, and all the jobs associated with the maintenance of both the services supplied and the personnel that work in the offices. All this economic activity creates jobs.
So, the next time you hear a politician or businessman announce a new business tax incentive, realize that they have just increased your taxes (to make up the loss in revenue). If we were to instead increase household spending by increasing household income, business would gladly and enthusiastically supply the goods and services consumers desire. Increasing supply does not increase economic activity; it is demand that creates jobs.
More at ALL BUSINESS
