Let put one myth to rest - Largesse for the Rich

[Chiteng]

I keep hearing almost daily on TV that we cant raise taxes on the rich, 'because they create the jobs'
That is called 'Ad Hoc' reasoning.

Proof of this is easy to find: Twelve years ago, Bush Jr got his 'Bush Tax Cuts' passed.
At the time, he claimed it would create jobs. It didnt. It still hasnt.
What it HAS done, is allow many rich people to KEEP their money. That is all.

If that was your goal, then the issue pleases you. If your issue was job creation, not so much.

After TWELVE YEARS, you would think that this would be enough time, to see some jobs.
Oddly enough, not. However....twelve years of those taxes, might have accomplished SOMETHING.

So lets bury this myth. Such claims are simply a means for the rich to blackmail the rest of us. 'If you dont give us what we want, we will hurt you'

I really dont like bullies, dont like being lied to either.

I think Obama should simply tell the Republicans that they can deal with him, or we can all drive off the cliff together. Poor people will NOT lose as much as rich people.
So go ahead, call the bluff. As for sequestering, hey you all agreed to it, you deal with it.

You see the rich tried to blackmail FDR a long time ago. But he was one of them. He knew the game. So it didnt work. He raised the taxes on the rich. Oddly enough,
the country did just fine.

That is what I hate most about this Prez. He talks big, and he keeps on caving.
He is the worlds biggest puss.

 

[rugbyLEAGUEfan]

I don't necessarily disagree, but how has this put the myth to rest? If tax cuts for the rich don't create jobs, then show me why this is the case?

 

[Winner]

That is what I hate most about this Prez. He talks big, and he keeps on caving.
He is the worlds biggest puss.

Indeed. Obama's greatest failure is his incapability to translate his initially widespread support into far-reaching reforms. Once he started looking weak, his whole presidency was derailed. It's a shame really, a wasted opportunity for America.

As for taxes on the rich - America can easily tax them brutally. They won't flee - they don't have anywhere to go. They would cry 'socialism' and complain, but that would be all they'd be able to do. Aside from throwing money at the Republicans and funding Tea Parties to wage guerilla camp-- wait, they did that anyway, so what the heck is Obama afraid of?

On the other hand, a part of the blame is on the US political system, which makes far-reaching reforms very hard to push through due to extremely short legislative electoral terms (2 years? Come on! That only leads to a permanent election campaign, with no time to do actual work free of fear of being voted out of office). Maybe you should do something about that as well.

 

[Chiteng]

I don't necessarily disagree, but how has this put the myth to rest? If tax cuts for the rich don't create jobs, then show me why this is the case?

'can' does not mean 'will'

Or allow me a different tact: If you dont create jobs, we will take your money away, legally.

 

[Terxpahseyton]

I don't necessarily disagree, but how has this put the myth to rest? If tax cuts for the rich don't create jobs, then show me why this is the case?

(1)Lower taxes for the rich mean higher taxes for the not so rich. But jobs depend on people financing them through consumption, which most of all applies to the not so rich as they spend everything they earn.
(2) Investing does not have to create jobs. As I see it most investing goes through the financial markets and it can come back from there with a net profit (or loss) without having created a single job

 

[Formaldehyde]

I don't necessarily disagree, but how has this put the myth to rest? If tax cuts for the rich don't create jobs, then show me why this is the case?

Murky posted a TED talk video in the Youtube thread by Nick Hanauer that explains this quite well. I reposted it in the "Loyal Subjects of the Wealthy Thread" along with a Young Turks video explaining why it has been "banned" from the typical TED talks coverage. I strongly suggest you watch it since it explains why this is a myth far better than I can:

http://forums.civfanatics.com/showpost.php?p=11554881&postcount=119

Here is the transcript of the speech:

http://lybio.net/nick-hanauer-ted-talks-the-inequality-speech/people/

I have started, or helped start, dozens of companies and initially hired lots of people. But if there was no one around who could afford to buy what we had to sell, all those companies and all those jobs would have evaporated.

That's why I can say with confidence that rich people don't create jobs, nor do businesses, large or small. Jobs are a consequence of a circle of life-like feedback loop between customers and businesses. And only consumers can set in motion this virtuous cycle of increasing demand and hiring. In this sense, an ordinary consumer is more of a job creator than a capitalist like me.

That's why when business people take credit for creating jobs, it's a little bit like squirrels taking credit for creating evolution. It's actually the other way around.

Anyone who's ever run a business knows that hiring more people is a course of last resort for capitalists. It's what we do if, and only if, rising customer demand requires it. And in this sense, calling yourselves job creators isn't just inaccurate, it's disingenuous.

That's why our existing policies are so upside down. When the biggest tax exemptions and the lowest rates benefit the richest, all in the name of job creation, all that happens is that the rich get richer.

Since 1980, the share of income for the top 1% of Americans has more than tripled, while our effective tax rates have gone down by 50%. If it was true that lower taxes for the rich and more wealth for the wealthy led to job creation, today we would be drowning in jobs. [applause] Thank you. And yet, unemployment and under-employment is at record highs.

Significant privileges have come to people like me, capitalists, for being perceived as “job creators” at the center of the economic universe; and the language and metaphors we use to defend the current economic and social arrangements is telling. It’s a small jump from “job creator” to “The Creator”. This language obviously wasn’t chosen by accident. And it’s only honest to admit that when somebody like me calls themselves a “job creator”, we’re not just describing how the economy works, but more particularly, we’re making a claim on status and privileges that we deserve.

Speaking of special privileges, the extraordinary differential between the 15% tax rate that capitalists pay on carried interest, dividends and capital gains — and the 35% top marginal rate on work that ordinary Americans pay — it’s kind of hard to justify without a touch of deification.

We’ve had it backwards for the last 30 years. Rich people like me don’t create jobs, jobs are a consequence of an eco-systemic feedback loop between customers and businesses. And when the middle-class thrives, businesses grow and hire — and owners profit.

That’s why taxing the rich to pay for investments that benefit all, is such a fantastic deal for the middle-class and the rich.

So ladies and gentleman, here’s an idea worth spreading…

In a capitalist economy, the true job creators are middle-class consumers. And taxing the rich to make investments will make the middle-class grow and thrive. It’s the single shrewdest thing we can do for the middle-class, for the poor, and for the rich.

The Charts TED Doesn't Want to Share

Updates, 5/17/12: On his blog, TED's Chris Anderson has responded to what he calls the "non-story" about Hanauer's talk. He says it was not posted on the TED home page because it didn't meet its standards: "It framed the issue in a way that was explicitly partisan. And it included a number of arguments that were unconvincing, even to those of us who supported his overall stance. The audience at TED who heard it live (and who are often accused of being overly enthusiastic about left-leaning ideas) gave it, on average, mediocre ratings."

(1)Lower taxes for the rich mean higher taxes for the not so rich. But jobs depend on people financing them through consumption, which most of all applies to the not so rich as they spend everything they earn.
(2) Investing does not have to create jobs. As I see it most investing goes through the financial markets and it can come back from there with a net profit (or loss) without having created a single job

That is essentially it in a nutshell.

 

[albie_123]

As for taxes on the rich - America can easily tax them brutally. They won't flee - they don't have anywhere to go.

Actually, they do. But when they threaten to, America decides that it can tax its citizens even if they decide to revoke said citizenship.

http://latino.foxnews.com/latino/ne...d-brazilian-co-founder-told-not-to-return-to/

U.S. Sens. Charles E. Schumer (D-N.Y.) and Bob Casey (D-Pa.) say they aren't buying Saverin's story.

The senators want to make sure he never sets foot in the United States again unless he pays tens of millions of dollars in taxes he will owe after the company's initial public offering.

On Thursday, the senators introduced legislation to punish anyone who gives up citizenship to duck big tax bills.

 

[GoodSarmatian]

(1)Lower taxes for the rich mean higher taxes for the not so rich.

Not necessarily.
You can also cut public services, close fire departments and schools, fire teachers and policemen, privatise the prisons and let your infrastructure decay.

 

[peter grimes]

Indeed. Obama's greatest failure is his incapability to translate his initially widespread support into far-reaching reforms. Once he started looking weak, his whole presidency was derailed. It's a shame really, a wasted opportunity for America.

As for taxes on the rich - America can easily tax them brutally. They won't flee - they don't have anywhere to go. They would cry 'socialism' and complain, but that would be all they'd be able to do. Aside from throwing money at the Republicans and funding Tea Parties to wage guerilla camp-- wait, they did that anyway, so what the heck is Obama afraid of?

On the other hand, a part of the blame is on the US political system, which makes far-reaching reforms very hard to push through due to extremely short legislative electoral terms (2 years? Come on! That only leads to a permanent election campaign, with no time to do actual work free of fear of being voted out of office). Maybe you should do something about that as well.

I heard an interview on a radio program that talked about Obama's missteps. It was fascinating, because it laid all of his weakness over the past 4 years on one decision: to NOT pursue public financing of campaigns

By maintaining the status quo regarding campaign financing all other efforts at reform were able to be hijacked by monied interests.

Yes, there is something to be said for longer House terms (Senators serve for 6 year terms), but I think it's far more important to get special interest money out of elections. Until that happens I am very pessimistic about the prospects of any other reforms.

 

[Evie]

Not necessarily.
You can also cut public services, close fire departments and schools, fire teachers and policemen, privatise the prisons and let your infrastructure decay.

And then the not-so-rich will have to pay for these things one way or another, resulting in less money being available to boost the old private goods and service market.

So in effect, still a tax on the not so rich.

Effect: money that WOULD have gone into private goods and services (ie, used to support the economy) instead end up going into paying for things the government used to pay for.

 

[History_Buff]

Yeah, if anyone needs any more than this, go read some Robert Reich. He's been writing books about how this whole thing started since he left public service in like 1996.

 

[Leoreth]

Not necessarily.
You can also cut public services, close fire departments and schools, fire teachers and policemen, privatise the prisons and let your infrastructure decay.

That sounds awfully familiar.

 

[Cutlass]

Not necessarily.
You can also cut public services, close fire departments and schools, fire teachers and policemen, privatise the prisons and let your infrastructure decay.

That's effectively an indirect tax on the middle class and poor.

 

[innonimatu]

explaining why it has been "banned" from the typical TED talks coverage.

And that is why I have long ago given up on seeing any of those TED talks. Even in the beginning most struck me as feel-good propaganda pieces with little useful insight. Obvious there are some gems to be found there, but it looks like one has to search for the "banned" ones...

 

[Lord of Elves]

I've never understood the logic of not taxing the rich on a personal level. Meaning, the CEO of a company doesn't decide when to hire and how many people to hire; one of his employees does, based on cost analysis/whatever else. How does lowering the CEO's taxes create more jobs? Would it not make more sense to lower the corporate tax?

Perhaps I'm missing the point.

 

[History_Buff]

I've never understood the logic of not taxing the rich on a personal level. Meaning, the CEO of a company doesn't decide when to hire and how many people to hire; one of his employees does, based on cost analysis/whatever else. How does lowering the CEO's taxes create more jobs? Would it not make more sense to lower the corporate tax?

Perhaps I'm missing the point.

Yeah, exactly. Corporate taxes are weird, and we should likely get rid of them (keeping caveats about money moving over international borders), though if you listen to countless business types, corporate taxes don't matter at all when it comes to decisions like whether to hire people. It only counts when you're talking about where to headquarter.

Personal taxes are even more removed. We need to create several more brackets, and then raise the top rates about 10%.

 

[Angst]

but don't you see, obama ruined bush's ingeniosity with his sozialist projct

 

[Lord of Elves]

Yeah, exactly. Corporate taxes are weird, and we should likely get rid of them (keeping caveats about money moving over international borders), though if you listen to countless business types, corporate taxes don't matter at all when it comes to decisions like whether to hire people. It only counts when you're talking about where to headquarter.

Personal taxes are even more removed. We need to create several more brackets, and then raise the top rates about 10%.

Well, I don't understand the predication in the first place that taxing the rich (specifically, people who are employed in the upper echelons of important corporations or who invest large amounts of money in them) less would necessarily produce jobs. It's not like the CEO of a company personally decides who to hire, and how many people to hire, based off of his personal income because of course his personal income is not representative of the company's resources. The personal/household incomes of any other employees don't really come into account in a company's day-to-day dealings, so taxes on the rich ought to have very little to do with the production of jobs. Unless the implied idea is that if we tax the rich less, they will have more money to invest in business.

 

[Cutlass]

Within broad limits, taxing the rich more or less is not going to impact investment decisions at all. It just is not a relevant factor in investment decisions. Specific types of taxes would make more of an impact than overall tax rates. The whole "supply side" concept is really a fraud.

Where it comes from, why some people, including some economists (who should know better) seem to actually believe it, is that they have an extremely narrow and ideological concept of economics. In theory, all national income that is not consumed, but is rather saved, must go to investment, because that is the only other choice. Except that it's really not that simple. But if you think that it is simple, then you might think that the way to increase investment is to increase savings. Savings being the "supply" of investable money.

However, in practice business people simply do not work that way. The supply side acolytes seem to see "investments" as a form of consumption where the more there is, the more utility the investor receives from it. And it doesn't work like that at all. In the real world investors invest for a reason, that reason being to get a return on their money. And the more the better. They do not get utility out of the fact of having made an investment, but rather on the return from that investment. And that is the key point that is missed by the SS adherents. Because when the investors do not see the probability of an acceptable return on their investments, then they simply will not invest, no matter how much money they happen to have available that they could invest if they so chose.

And for that reason increasing the amount of money that investors have available to invest will not have any effect on the amount of money that is invested. It says nothing about the demand for investment funds.

Here is the key point. The key point that SS advocates simply never comprehend. Supply Side policies, as developed in the US in the modern era, work to reduce the demand for investments. They do so because they inevitably come at the expense of consumption. And because they work to reduce the demand for investments, they inevitably work to reduce the supply of investments. It cannot be otherwise. And all the rest of that money can do nothing other that float from speculation to bubble to speculation and bubble, because there is no available place for it to be invested, yet it loathes to sit idle.

 

[warpus]

Jobs are created by an increase in demand.

You can increase demand by giving the middle class more money to spend.

Tax cuts for the rich will not increase demand.