You hear it again and again, variation after variation on a core message: if you tax rich people it kills jobs. You hear about "job-killing tax hikes," or that "taxing the rich hurts jobs," "taxes kill jobs," "taxes take money out of the economy, "if you tax the rich they won't be able to provide jobs." ... on and on it goes. So do we really depend on "the rich" to "create" jobs? Or do jobs get created when they fill a need?
Here is a recent typical example, Obama Touts Job-Killing Tax Plan, written by a senior fellow at the Cato Institute and chairman of the Institute for Global Economic Growth:
Some people, in their pursuit of profit, benefit their fellow humans by creating new or better goods and services, and then by employing others. We call such people entrepreneurs and productive workers.Others are parasites who suck the blood and energy away from the productive. Such people are most often found in government.
Perhaps the most vivid description of what happens to a society where the parasites become so numerous and powerful that they destroy their productive hosts is Ayn Rand's classic novel "Atlas Shrugged." ...
Producers and Parasites
The idea that there are producers and parasites as expressed in the example above has become a core philosophy of conservatives. They claim that wealthy people "produce" and are rich because they "produce." The rest of us are "parasites" who suck blood and energy from the productive rich, by taxing them. In this belief system, We, the People are basically just "the help" who are otherwise in the way, and taxing the producers to pay for our "entitlements." We "take money" from the producers through taxes, which are "redistributed" to the parasites. They repeat the slogan, "Taxes are theft," and take the "money we earned" by "force" (i.e. government.)
Republican Speaker of the House John Boehner echoes this core philosophy of "producers" and "parasites," saying yesterday:
"I believe raising taxes on the very people that we expect to reinvest in our economy and to hire people is the wrong idea," he said. "For those people to give that money to the government...means it wont get reinvested in our economy at a time when we're trying to create jobs."
"The very people" who "hire people" shouldn't have to pay taxes because that money is then taken out of the productive economy and just given to the parasites -- "the help" -- meaning you and me...
So is it true? Do "they" create jobs? Do we "depend on" the wealthy to "create jobs?"
Demand Creates Jobs
I used to own a business and have been in senior positions at other businesses, and I know many others who have started and operated businesses of all sizes. I can tell you from direct experience that I tried very hard to employ the right number of people. What I mean by this is that when there were lots of customers I would add people to meet the demand. And when demand slacked off I had to let people go.
If I had extra money I wouldn't just hire people to sit around and read the paper. And if I had more customers than I could handle that -- the revenue generated by meeting the additional demand from the extra customers -- is what would pay for employing more people to meet the demand. It is a pretty simple equation: you employ the right number of people to meet the demand your business has.
If you ask around you will find that every business tries to employ the right number of people to meet the demand. Any business owner or manager will tell you that they hire based on need, not on how much they have in the bank. (Read more here, in last year's Businesses Do Not Create Jobs.)
Taxes make absolutely no difference in the hiring equation. In fact, paying taxes means you are already making money, which means you have already hired the right number of people. Taxes are based on subtracting your costs from your revenue, and if you have profits after you cover your costs, then you might be taxed. You don't even calculate your taxes until well after the hiring decision has been made. You don;t lay people off to "cover" your taxes. And even if you did lay people off to "cover' taxes it would lower your costs and you would have more profit, which means you would have more taxes... except that laying someone off when you had demand would cause you to have less revenue, ... and you see how ridiculous it is to associate taxes with hiring at all!
People coming in the door and buying things is what creates jobs.
The Rich Do Not Create Jobs
Lots of regular people having money to spend is what creates jobs and businesses. That is the basic idea of demand-side economics and it works. In a consumer-driven economy designed to serve people, regular people with money in their pockets is what keeps everything going. And the equal opportunity of democracy with its reinvestment in infrastructure and education and the other fruits of democracy is fundamental to keeping a demand-side economy functioning.
When all the money goes to a few at the top everything breaks down. Taxing the people at the top and reinvesting the money into the democratic society is fundamental to keeping things going.
Democracy Creates Jobs
This idea that a few wealthy people -- the "producers" -- hand everything down to the rest of us -- "the parasites" -- is fundamentally at odds with the concept of democracy. In a democracy we all have an equal voice and an equal stake in how our society and our economy does. We do not "depend" on the good graces of a favored few for our livelihoods. We all are supposed to have an equal opportunity, and equal rights. And there are things we are all entitled to -- "entitlements" -- that we get just because we were born here. But we all share in the responsibility to cover the costs of democracy -- with the rich having a greater responsibility than the rest of us because they receive the most benefit from it. This is why we have "progressive taxes" where the rates are supposed to go up as the income does.
Taxes Are The Lifeblood Of Democracy And The Prosperity That Democracy Produces
In a democracy the rich are supposed to pay more to cover things like building and maintaining the roads and schools because these are the things that enable their wealth. They actually do use the roads and schools more because the roads enable their businesses to prosper and the schools provide educated employees. But it isn't just that the rich use roads more, it is that everyone has a right to use roads and a right to transportation because we are a democracy and everyone has the same rights. And as a citizen in a democracy you have an obligation to pay your share for that.
A democracy is supposed have a progressive tax structure that is in proportion to the means to pay. We do this because those who get more from the system do so because the democratic system offers them that ability. Their wealth is because of our system and therefore they owe back to the system in proportion. (Plus, history has taught the lesson that great wealth opposes democracy, so democracy must oppose the accumulation of great, disproportional wealth. In other words, part of the contract of living in a democracy is your obligation to protect the democracy and high taxes at the top is one of those protections.)
The conservative "producer and parasite" anti-tax philosophy is fundamentally at odds with the concepts of democracy (which they proudly acknowledge - see more here, and here) and should be understood and criticized as such. Taxes do not "take money out of the economy" they enable the economy. The rich do not "create jobs, We, the People create jobs.
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
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We had a working model on how to create a strong middle class. I like to call it the Webster Economic Model after Senator Daniel Webster from Massachusetts. He started working on the model in the 20's - that's 1820's his biggest opponent was a slave/plantation owning Senator John C. Calhoun. It worked well for 170 years but then came NAFTA and the WTO our manufacturing work force the basis for a strong middle class has suffered ever since!
Senator John C. Calhoun was a free trader and today if he was alive he would be a Free Trader CEO of some Mega Corporate Farm Conglomerate doing everything to advance the interest of Wall Street!
I would imagine Senator Daniel Webster would be advancing the interest of Main Street!
What's good for Main Street is good for the middle class assume what is good for Wall Street is bad for the middle class seems to be a safe bet!
This state of affairs is called "flexicurity" by the the Danes. It allows businesses to react quickly, either staffing up or down as required by market demand, while shielding workers from the negative impacts of job loss. Government can afford to provide the income security because of the high rate of taxation. This is really the best of both worlds and shows how misleading and short-sighted are the arguments that pit "socialism" against "the free-market".
It is so easily understood when explained.
Unfortunately most people do not ever have it explained. They only get the soundbite that taxes are theft.
I see you are posting on truthout now as well. Great! The more who get the information the better.
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Or property, the very idea of "owning' something at all is a function of government.
"Socialism is an economic system in which the means of production are publicly or commonly owned and controlled co-operatively, or a political philosophy advocating such a system. A primary goal of socialism is social equality and a distribution of wealth based on one's contribution to society, and an economic arrangement that would serve the interests of society as a whole.[1][2] As a form of social organization, socialism is based on relatively equal-power relations, self-management and a reduction or elimination of hierarchical forms of management in the economic structure of society http://en.wikipedia.org/wiki/Socialism
Distribution of wealth based on one's contribution to society?
Having the employees being the owners of the company they work for gives them a vested interest in improving services and assures they receive the "profits" they generate. Speaking from experience, no one works harder than a self employed person.
Doesn't sound that bad to me.
Better than who you know being more important that what you know. The system we seem to be operating under now.
Fox told me that too.
You are right in that the success of "many things" (I assume you mean businesses) depends on the workers. Too many corporatists don't realize this and they think they can pay their workers poorly and cut corners on wages and benefits whenever possible.
Do I have it right?
If taxes do not affect jobs, then we could tax businesses at 99.9% and not affect the economy.
"Democracy Creates Jobs": Uhm, so China has had no job increases?
"A democracy is supposed have a progressive tax structure.." It is "supposed to"?? Where did you get that rule? Hong Kong and Singapore are two of the fastest growing regions in the world, yet they have essentially a flat tax.
I could go on, but since it was all Bush's fault anyway, probably a waste of time.
http://www.msnbc.msn.com/id/39546204/ns/business-world_business/t/chinas-wealth-gap-strains-social-fabric/
"Hong Kong and Singapore are two of the fastest growing regions in the world, yet they have essentially a flat tax."
http://www.channelnewsasia.com/stories/singaporelocalnews/view/1110326/1/.html
Are you against democracy?
The reality is that if we all PAYED an actual tax there would be no need for this discussion. Most at the top loop hole their way out of paying any tax and the rest of us struggle to pay what we are told to pay. Bush didn't do anything toward solving this problem so yes he does get some of the blame. If you don't want to do something you just hire a lobbyist and block it out of existence. So people with billions at their disposal tend to get more cooperation from republican money grubbers than democratic ones that why you hear all those crazy slogans. "Job killing, Budget breaking, Small business destroying...etc. Are bull. Not paying any taxes affects jobs when many of the fortune 500 get away with it.
Can you tell me about any of these businesses that employed tens of thousands? Did any of them have customers that actually provided the money for you to employ these thousands, or did you do it all on your own?
Increasing taxes does not mean that the government is the arbiter of distribution. It means that the government can continue to provide the foundation, the society, the framework within which you can grow you enterprises. You know, roads, banks, currency, police, safe vegetables, educated workforce, courts to enforce contracts,buildings that are safe to work in, electricity that is exactly the same 60 hz. from state to state, police and firemen, an army to keep you safe at night, mail to carry your invoices to customers. You didn't do it on your own. It is a measure of how well government works that you don't even notice most of the time.
I have built several businesses, some moderately successful, a few failures. The failures were generally the ones without customers.
FYI, my career has been spent building businesses and I have found the incentives to innovate, invest and compensate for performance have yielded far better results than relying on the gov't for these functions.
Finally, the 90% tax rate was a fiction. Prior to 1986, the notional tax rate was simply never paid as the highest income tax payers had massive tax breaks and loopholes the vast majority which have been closed. In the simplest of terms, 30 years ago, total gov't (state+federal) was 20% of GDP today it is 33% of GDP, even with the supposedly lower top tax rate and 50% of the population paying net zero federal income taxes
So are you actually saying you hire people based on your taxes and not on your orders?
Hey skepitcal, no wonder you've started dozens of businesses.
With that kind of of operational philosophy, any of them still around?
It's rather clear that the forces from the 'right' continue the attempts to control the voting public. I propose we continue to put forward very clear data, stats, and poll results re: the mass of candidates slithering in for the 2012 showdown. Let us reveal to them the accomplishments that President Obama has experienced during the past 2 1/2 years.......
TRUTH will ultimately prevail; many naysayers will, ultimately, reluctantly recognize the TRUTH - they may not own it - yet, they will (despite their preferences) recognize that, in their hearts, that the repubs 'missed the boat', and that they are simply pandering to 'big money interests'.
I'll pose my retorical question again - Have the Repubs really promoted the 'best interests' of America???????
Fanned!
Common sense is the first thing that falls
They divide up the booty
And they call it their duty
Then proceed to kick us in the knee.