Enough Already About the Jobs the Rich Create
The worst part about watching CNBC to monitor my stocks these days -- even worse than seeing those stocks in free-fall -- is having to listen to many of the reporters and guests wailing about the dangers of President Obama's proposed tax hike on the wealthy and railing against this act of "class warfare." Hmmm... Could it be a coincidence that some of the loudest on-air complainers are themselves in the targeted income bracket of more than $250,000 a year? (I am too, in a good year.) Before these commentators quit their high-paying jobs to avoid the calamity of higher taxes, I'd like to remind them that they have a little time. The President doesn't intend to boost their taxes until after we get out of this recession. In the meantime, he's cutting almost everyone else's taxes.
But even the thought of future tax hikes -- to help pay for two wars and other more worthwhile government spending -- sends these unrepentant supply-siders into a frenzy. 'The rich own the small businesses that create the jobs,' Obama's critics say. 'The rich are the engine of growth,' the mantra goes. Well, excuse me, but on this planet what we've seen in the last couple of years is a lot of rich bankers and other unscrupulous speculators and con artists (they don't really deserve the dignified title of business people) destroy jobs on a gargantuan scale.
And back when the rich were creating jobs, those jobs weren't so wonderful. Just how many jobs created by the construction of condos, shopping malls and SUV production does this country really need at a time when our bridges and schools are falling apart, when millions don't have health insurance, when our energy system is based on 19th Century technology, and when we're starving our scientists and teachers?
The rich are no longer in a mood to create even lousy jobs. They are taking what's left of their riches and fleeing to the safety of treasury bills. They are still trying to figure out if their asset managers were funneling money to Bernie Madoff and other crooks.
When private demand and investment collapse, the government has to step in and boost its own investment in our future. Fortunately, the government intends to invest in things we really need like education, science, infrastructure, health care and renewable energy. Frankly, that's better than video games and hummers and all the other crap that Americans buy when "we get to keep our own money."
What supply-siders don't seem to understand is that government jobs are not a dead weight on economic growth. If we employ more teachers and firefighters and peanut-butter-factory inspectors, they will take their paychecks and go to the mall and buy the crap that private investment tends to favor. Vital services and crap can coexist.
Any decent country needs a balance between public and private investment. Yes, if the government runs everything, you get a dreary Soviet-style morass that makes almost everyone poor. But the starve-the-government-to-death (except for the war machine and corporate welfare queens) philosophy of the Bush era was leading us to a situation in which the rich were counting their dollars in gated communities, while the rest of society was going to hell -- even while enjoying the video games.
Thank goodness that the trickle-down economy collapsed from its own incompetence and corruption. Thank goodness the American people elected Barack Obama to rebuild a society we can be proud of.
So, don't despair, all you CNBC anchors. Yes, you'll be paying higher taxes in a couple of years. But that's because Obama is going to make you even richer than you are now.
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This story is full of non-sequitors.
It does very little to support the notion that taxing businesses (and the people who own them) doesn't cause them to create fewer jobs. Of course it does. Duh.
That isn't what the big argument is about.
Raising taxes always creates more costs for business, and will result in less wealth creation.
Spending other people's money is usually wasteful. Yes we can use more good teachers, but the pay scale isn't the reason we have crappy teachers. Adding more government jobs is just hugely wasteful outside of a few specific areas.
The big argument is really about what benefits do we want to provide to society, versus what cost do we want to burden society with.
Rob Peter to pay Paul, and you will always piss of Peter. But Paul never seems to mind.
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I repeat. When private industry stops investing and reduces jobs on a massive scale, as is now the case, the Government needs to step in. Study economics and study history before you start handing out three-letter insults. Also learn how to spell non sequitur.
There are plenty of Peters who are more decent than you give them credit for. I agree that a lot of government spending is wasteful -- just as wasteful as private spending. Obama should tell the Democrats in Congress that they have to compromise and take some of the most ridiculous earmarks out of the spending bill, or he will veto it. Obama can't let the Congress ignore his desire to change Washington.
One more thing: in an ideal tax system, there would be no taxes on businesses, only taxes on people. Corporate taxes are double taxation. We should also tax consumption rather than income. But it will be hard to get from where we are now to an ideal system.
But the government has no intention of stepping in. Maybe only 10 or 20 percent of the "stimulus" package is actually a stimulus. The rest is pork, waste, or just flat out a means to expand government for the purposes of political gain.
And government wastage is much worse than private waste. How can you even compare the two? When I have to justify spending for my company, it really needs to have a good reason. For the government, it is just whatever they can get away with.
I disagree on about your idea the ideal tax system. Yes of course, only individuals pay taxes, not businesses, but a business has rights (being incorporated), that an individual never has. In exchange for those rights, they need to pony up a bit to society.
Your suggestion about Obama vetoing the spending bill made me laugh. Obama has no track record of doing anything against the wishes of his party. He will likely never do such a thing. (It would be great if he did, and show some backbone. )
That was a clear forceful message!
If the super-rich really do create so many jobs, where are they all? After 8 years of Bush tax cuts for the rich, we should be at near full-employment. Even the crappy jobs...where ARE they?
I heard Limbaugh one day defend the use of corporate jets by the auto CEO's, saying that Americans should be GLAD these guys were flying the luxury jets, because the people that make them have jobs. Yeah, what, all 11 of them?
Hardly a huge industry, more of a specialty market, no?
SMALL BUSINESS IS THE REAL KEY TO MORE JOBS!
Up to 6 million jobs and 4 million small businesses can be created by A Human Investment Tax Credit Program.
This was missing from the stimulus package.
One component, a jobs tax credit, became law for one year and generated more jobs in less time than any legislation in our history.
Two versions of the 2009 Report can be downloaded free at: aesopinstitute.org
The full Report contains a post Keynesian economic analysis.
The short version includes only what can be done, as well as an outline for Congress. The House Ways and Means Committee needs to launch this urgently needed Program without delay.
Well said.
I have said this before and I will say it again. The Obama team need to do some educating of people about how taxes work. From what I hear on the radio and television, most people believe that making $250,001 will shift them into a higher tax bracket for the whole amount, not the $1.
They also confuse revenue and taxable income when it comes to Schedule C income. This was the problem with the controversy during the election and has not yet been corrected in most people's minds.
Finally, I think that people should realize that $250,000 is a lot of taxable income. I haven't done the math, but it certainly represents more that $300,000 of W-2 income for your average family of four.
I don't know if you can fight the Joe-The-Plumber syndrome.
What syndrome is that?
The idea that spreading the wealth around means taking other people's wealth (to me) doesn't seem to be understood well enough.
Trickle UP Ecnomics No More Trickle Down which is NOT Sustanable...create jobs and let people have access to microloans to create small businesses and become self-employed and rebuild a system of trust in the economy...
That's EXACTLY what is needed to create a healthy, strong economy! I have been saying this for years. Credit, schmedit...except for microloans, which are the real engines for solving our problems. The problem isn't so much lack of (consumer) credit----the problem is lack of WAGES, as in decent living wages and income. Helloooo...people turn to debt when they don't have enough income for their kids' braces, their car breakdowns, their visits to the doctors where co-pays are unaffordable, and other contingencies of life!
We must distinguish between small business and major corporations. The former added 70% of new jobs while the latter shipped many jobs overseas and maintained excessive compensation. Small businesses are plagued by excessive regulation while the big guys have their lobbyists get special tax treatment unavailable to main street employers.
For years the GOP has claimed to speak for small business but it has sold out to big money. All we want is a level playing field and we'll be happy. The fact that corporate pay is 411 times that of their workers illustrates the inequity that must be addressed.
And of those small business's that add jobs that make more than $250,000 willbe taxed more and will either pass that tax to the consumer or not employ people.
Since when ddi the American dream stop at $250,000?
pssssst... It's less than 5% of small businesses you're talking about. This sacred cow isn't getting another subsidy...
So in your world small business owners that are considering hiring one additional person will not do so because the tax on the revenues generated by that person, less all of the costs of that person and their benefits, will be taxed by an additional 3%?
Really? With that sort of thinking, I doubt that you know any small business owners profitable enough to be in the $250,000 taxable income bracket.
That's the type misdirection the GOP has been trying to spin for years. The reality is that only an idiot would refuse to hire additional employees if they made him money. The fact that I might make a few % less on those additional people wouldn't even factor into the equation.
As for your other misinformation about passing those costs on, well that more BS. My prices are determined by market conditions. If I could raise prices it wouldn't make any difference how many people I've added. Tell Rush his business model is hopelessly flawed.
Amazing article. I've been saying the same thing too. Thanks Charles.
As much as I like Obama, and am willing to pay more taxes, people here need to acknowledge that many of their jobs are due to entrepreneurs who spend countless hours creating organizations out their imagination, toil and investor money.
I don't think it serves anyone to begrudge those people their wealth when they create new products, services and companies and make all our lives better.
The truth is that in the last eight years we have spent and NOT taxed. That is true fiscal irresponsibility. Now is the time to pay for those that can afford it but we should THANK people for their money and not act as if all people with wealth are somehow bad or don't deserve the money they have earned.
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Thanks for making a valid counterpoint to what I was emphasizing. Like you, I'm very grateful to the people who get rich by doing great things — for example Steve Jobs and all the folks at Apple who created the computer I'm working on. Unfortunately, many people, especially in the financial sector, have undeservedly achieved wealth while driving their institutions into the ground and destroying a large part of the life savings of employees and investors. Do I begrudge the wealth of Stanley O'Neal, Chuck Prince and Richard Fuld? I sure do. But you're right. I don't want anyone to think I'm tarring all the rich with that brush. Another category is the large group people simply inherit great wealth and may or may do much themselves to create jobs. They can chip in some more taxes to help us balance our books.
But you do begrudge them if they make more than a certain amount of money.
And now you want to tax when the country is finacialy in the toilet.
No one is bedrudging anyone for making money. They have to pay taxes, which is what you have a problem with. Why should they get a tax break? they have had a tax break under Bush, which is why we have such a huge deficit.
I never met anyone intelligent from Dallas (far southern oklahoma). You are no exception. I am willing to be that you are currently unemployed, living off the gov't teat and thinking that you are a republican.
Go, on Parrot
Everyone always forgets that without the government, it would be very difficult to live, much less start a business and make millions.
Those fortunate enough to make lots of money do so because of the things taxes pay for.
Everyone deserves "Life, Liberty, and the Pursuit of Happiness".
Let those that benefit most from the system pay the most to maintain the system.
While we have spent, it is certainly not true that we have not taxed. Until this recession, the amount of revenue taken in was way up.
Even before the recession the national debt had nearly doubled since 2001. That revenue increase you speak of doesn't seem to be doing the job.
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Thanks for the good comments. I'm glad this struck a chord with you. Regards, Charles
See Charles Alexander's Profile
Thanks for all the good comments. Glad this struck a chord with you. Regards, Charles
Well said. I would be interested in hearing your thoughts on a public owned, non-profit "sustenance" economy(power, education, health care etc), separated from the Capitalist economy. I thought I understood something to that effect in the read, but wasn't quite sure.
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Not sure you should try to totally separate the two. Elements of private enterprise and competition can enhance performance in all the areas you mentioned. But clearly the Republicans are too obsessed with privatization of government services. Private health insurance companies have added cost and complexity — not efficiency — to health care. Ideologues who believe in simple formulas are never effective administrators. You have to experiment and see what works. I think that's the pragmatic approach that Obama wants to take. In my own native state of Tennessee, the Tennessee Valley Authority became a largely successful hybrid public-private enterprise, but there is still tension between controlling costs and providing the best possible service. At the very least, the "sustenance" economy you mentioned needs to be carefully regulated. The conservatives who imply that all government regulation is bad should be made to eat peanut butter full of Salmonella.
Oh yes, the Tennessee Valley Authority. You're not by chance from anywhere near where TVA just negligently dumped coal slug into their neighbors yards in a spill larger than the Exxon Valdez oil spill which ruined the lives of everyone living in Prince William Sound? Outside my window is the boat house containing the yacht of the guy who invented the method for extruding PVC pipe and I don't begrudge his wealth, but when all the fishermen in Prince William Sound lost their livelihood and Exxon jerked them around for over 20 years now, I do resent the profits their stockholders have made.
For many decades business has been so focused on the bottom line that human resources have been nothing more than something else to squeeze a penny out of. Did you know that most people who work at Wal-Mart make so little they are eligible for food stamps? Workers have been exploited so the rich will have the money to invest with Bernie Madoff.
I think it's about time the government started representing the interest of the social justice of this country.
I agree,I'm tired of the crying of the rich and some of the media is part of that group.Let them find a job somewhere else that pays that kind of money for what they do.
Great article. But the kool-aid drinkers will never believe it, or admit it.
I had a friend of mine that has his own plumbing company. He does ok but throughout our conversation he confided that he didn’t make any where near $250k a year. But he was still against capping CEO pay and higher taxes because this is America and if you remove the incentive of being able to hit it rich why would anyone try?
One other thing, when you tell them to step away from the Rush or the Fox it pi$$es them off.
Was this the real life JOE THE PLUMmer?
When you are privately owned, you can pay yourself whatever u want. Public companies who are losing money should not have that privelege.
so, low taxes are the incentive to make money? you are confused.
Unfortunately, there are those out there (I have a friend who is one - but I think it just because she's so scared) that wants the whole thing to implode. She feels the logs are being thrown on the fire by Obama (she refuses apparently to lay any blame at the feet of the GOP) and all this will end in a civil war between the classes.
So we're supposed to let the banks implode, put the Big 3 out of business (along with 3 million workers), let people lose their homes, end Medicare and SS? That's what she would prefer. Wow! Now that would bring about civil war. I can picture those little ole grey haired ladies out there with their guns screaming they want the SS back!
No you let the auto companie file for bankrupcy like the airlines did.
If a bank was stupid enough to give out bad or risky loans then they should fail!
Why are we REWARDING FAILURE????
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