Raise Taxes, Kill Jobs
If taxes are raised on the rich, job creation will stop. We’ve all heard this song and dance before.
Nick Hanauer, a member of the 1%, a successful entrepreneur who has started and sold many companies, gives a very different lesson on the economy, taxation, and the relationship each has on all of us.
. . . I can say with confidence that rich people don’t create jobs, nor do businesses, large or small. What does lead to more employment is the feedback loop between customers and businesses. And only consumers can set in motion a virtuous cycle that allows companies to survive and thrive and business owners to hire. An ordinary middle-class consumer is far more of a job creator than I ever have been or ever will be. . . .
. . . It is unquestionably true that without entrepreneurs and investors, you can’t have a dynamic and growing capitalist economy. But it’s equally true that without consumers, you can’t have entrepreneurs and investors. And the more we have happy customers with lots of disposable income, the better our businesses will do. . .
. . . The annual earnings of people like me are hundreds, if not thousands, of times greater than those of the average American, but we don’t buy hundreds or thousands of times more stuff. My family owns three cars, not 3,000. I buy a few pairs of pants and a few shirts a year, just like most American men. Like everyone else, I go out to eat with friends and family only occasionally. . . .
The rest goes in to the bank and sits, earning interest.
So, what is needed to spur economic growth and more jobs?
More Shoppers and More Disposable Income in the hands of those Shoppers.
. . . If the average American family still got the same share of income they earned in 1980, they would have an astounding $13,000 more in their pockets a year. It’s worth pausing to consider what our economy would be like today if middle-class consumers had that additional income to spend. . .
We’ve had it backward for the last 30 years. Rich people don’t create jobs. Middle-class consumers do, and when they thrive, U.S. businesses grow and profit.
OK, so the top 1% already pays 50% of the taxes, pray tell how them paying even more in taxes is going to make everyone else become bigger spenders.
It is more about tax and financial reform, or lack thereof, at the expense of the middle class. But Hanauer himself made this comment . . .
a 3 percent surtax on incomes above $1 million would be enough to maintain and expand the current payroll tax cut, preventing a $1,000 increase on the average worker’s taxes. . .
And how does that insure they’ll become spenders?
It doesn’t. In fact, I wonder how many folks spent Bush’s refunds instead of squireling it away.
His point is that the tax system is broken and that it has benefited the rich and hurt the middle class and therefore the economy. His argument is that it is the middle class that powers the economy. Their share of disposable income has decreased by nearly a third over the past 30 years. He happened to use the example (one that everyone is currently using) of raising taxes.
The most important point of the article is that raising taxes on the rich does not kill jobs. However, raising taxes on the other 99% takes away buying power, hurts the economy, businesses bottom line, and jobs.