When you think "small business", don't think "startup". Instead, think "neighborhood shop" -- these kinds of small businesses represent the vast majority of hiring, and they hire help in response to customer demand. So even if they could save the equivalent of one full-time employee on accounting and legal (an exaggeration, but let's go with it), they'd only re-invest that savings into other employees if it made sense to do so in light of current demand.
The general problem I have with the assertion that lowering taxes will create jobs, is that it assumes that taxes are the limiting step. In my experience, that's not the case for small businesses. The much bigger problem is ensuring that customers are always walking in the door.
Yes, but they'd have more money to spend. They'd be getting value for their money, whether it is expressed through corporate spending or through their personal spending. As it is right now their is giant drain on the us economy where people have to spend tons of money preparing taxes when a much simpler system could easily be used.
the thing about lowering taxes is that other than through increased consumer spending, it does not free up more money for me (the business owner) to hire people. I pay people out of pre-tax money; I'm going to have the same amount of pre-tax money no matter if the tax rate on the money I pay myself is 20% or 70%
Complexity, on the other hand, is paid for out of pre-tax money. If you go from me spending 10% of my pre tax money on accounting overhead to 20% of my pre-tax money on accounting overhead, that money comes out of my budget for employees and equipment. I mean, that money still goes to jobs, but those are /defensive/ jobs- I pay for an accountant, not because it gives me an advantage over the competition, because it does not. If anything, it slows me down. However, if I don't pay for the accountant, then I am at risk of being destroyed by the IRS. That is money I don't get to spend on beating my competition.
Just looking, it appears that my accounting overhead is a noticeable fraction of my personnel costs. my personnel costs are dwarfed by equipment and power costs. So yeah, it isn't that bad. But still, if you ask me how the government could help my company, the first thing I would ask for, before tax cuts or subsidies or anything is for a reduction of the complexity of tax, employment, and other laws I need to deal with.
When you think "small business", don't think "startup". Instead, think "neighborhood shop" -- these kinds of small businesses represent the vast majority of hiring, and they hire help in response to customer demand. So even if they could save the equivalent of one full-time employee on accounting and legal (an exaggeration, but let's go with it), they'd only re-invest that savings into other employees if it made sense to do so in light of current demand.
The general problem I have with the assertion that lowering taxes will create jobs, is that it assumes that taxes are the limiting step. In my experience, that's not the case for small businesses. The much bigger problem is ensuring that customers are always walking in the door.