July 11, 2012
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Job Creators???
Much has been said - mostly by Republican candidates for political office - that the US should definitely NOT dare to raise taxes on "Job Creators"- that is- on small (or large) businessmen. We are not talking corporate taxes here, rather individual income taxes. How this is supposed to relate to the willingness of businessmen to increase their business activity is never explained - for a good reason.
The personal income tax has no negative relationship or impact on business activity, except that too low taxes mean less government spending and less money in circulation and thus an economic slowdown with lower business activity. Indeed, the US's greatest growth spurt in modern times - the '50s - came at a time when the upper income tax rates were more than twice as high as they would be if the proposed rates are adopted.
Jobs are created by Businesses when there is increased demand for the business's products and services, independently from the tax rate the business owners must pay. Indeed, if their profits are reduced by higher taxes, they have great incentive to increase their business activity - not decrease it.
Comments (19)
I would like to see a universal fixed taxed rate. Every one regardless of income or stature pays 10% right across the board. No deductions no incentives no loopholes, just pay 10% of your gross and be done with it. I wonder how well that would work.
"too low taxes mean less government spending and less money in circulation and thus an economic slowdown with lower business activity. Indeed, the US's greatest growth spurt in modern times - the '50s - came at a time when the upper income tax rates were more than twice as high as they would be if the proposed rates are adopted."
Totally agree and add. If cutting the taxes on the "job creators" really worked, America would be thriving today instead of flat lining at best thanks to the ridiculous fillibustering of the house of reps.
"Job creator" is a euphamism, obviously, the mega wealthy are hording their profits, not creating jobs with their tax savings, if they were creating jobs with their tax savings we'd have whatever America's best equivolant is for 0 % unemployment after 10 years of these W Bush tax cuts on the millionaires and billionaires - which the house will not let Obama turn around.
how do you answer the question about outsourcing? I cannot tell you how many corporations, (cell phone companies, credit card companies, computer help services) that do not connect your call half-way across the world.
@Aloysius_son - There are some pretty obvious problems with flat taxes: First, a reasonable rate -say your 10% - would not come near financing a government in a country as large and developed as the US, and Second, any rate which would lead to the necessary income would be so regressive and hit the lower classes so hard that it would probably lead to revolution.
As a matter of fact, the development of the US as we know it - a rich powerful country with a vibrant middle class occured at the same time and because of our progressive income tax system and the greatest growth of individual wealth has been when the rates were the most progressive and highest.
@fashionably28 - Outsourcing is not always such a bad idea - it depends on the circumstances. Certainly jobs which can be done efficiently and sensibly in the country should be kept there but outsourcing may be benifit in other situations. A few years ago my wife was in an accident which required immediate reading of a CT scan at 2AM. Rather than rout out an expert and have them drive to the hospital, the scan was digitally transmitted to Australia and life-saving results were back in minutes.
Good reasoning.
I am very angry that I pay a higher percentage of my salary in taxes than the wealthiest group of Americans, some of whom manage to pay no taxes at all!
@tychecat - I totally agree with you about outsourcing. Instead of ranting and raving about bringing manufacturing jobs back to the US, I think it would benefit us to look at what the appropriate jobs are for a country in our state of development. It is possible that manufacturing is primarily the function of emerging countries and that may be perfectly appropriate. It helps those countries enter the world economy and keeps the price of goods at a level that is affordable. Maybe we should look at training our workforce for the jobs that exist here. There are over 1,000,000 jobs in the United States right now that cannot be filled because the workforce is not trained for them.
@Nance1 - Hi Nance,
I have to admit that a substantial part of my yearly income is not taxed at all - it's income from muni bonds which are currently paying at about 4.5% - not bad for nowadays
@tychecat - Even if you have a very good income, and it seems to me from reading you over the years that you do, I doubt that you are in that group of wealthiest Americans. We have a good investment portfolio, too, but we are not in the same league with Bill Gates. People who have a net worth of hundreds of millions or billions of dollars should be paying their fair share of the tax burden.
@Nance1 - I absolutely agree with you - but remember - "their fair share"is basically a politically determined amount. What should determine each of our "fair shares" is how much the country needs to provide the governmental services we democratically determine. Such "fair shares"to be apportioned so as to both improve the economy and cause the least distress to the greatest number. If you do it that way the country will have a progressive tax system - which we now have - and should never run a deficit. Those paying the highest percent will howl loudest, but history shows that they will also gain the most from a stimulated economy.
Do you think everyone should pay at least a token tax in addition to their Social Security/Medicare FICA taxes?
You're right we do have a pretty good income - but, sigh - are not in the upper two percent
I do believe that there are some people who do not have enough income to meet their basic needs and should not pay taxes, although I am not strongly opposed to everyone paying at least a token tax. It seems foolish to make those who are being supported through taxes pay taxes, though. That just means that the other tax payers need to give them more money so that they can do that. I think working people probably should pay at least a token tax. Those who are living only on public assistance or only on Social Security probably shouldn't. Most of those who have Social Security plus other forms of income should pay taxes.
I do have a problem with the very wealthy not carrying their fair share. I do not think their "fair share" should be a lower percentage than that paid by the middle class. Unfortunately, the people who hold the majority of the wealth in this country are able to convince a segment of the middle class that taxing the very wealthy at a higher level "kills jobs" and that is frightening to people who depend on employment to support themselves and their families, so they vote in favor of the the very wealthy. The political system that establishes the tax code does not favor the average American taxpayer and it tends to use fear to motivate them. The "least distress to the greatest number" would seem to indicate that the extremely wealthy should be bearing more of the tax load to relieve the middle and lower classes, who are by far the greatest number.
A certain segment of the population also listens to the Republican rhetoric about taxes and is afraid that their own taxes will go up and make it even more difficult for them to pay their bills. They do not understand that the proposed tax increases affect only those with much higher incomes. They allow fear to keep them from listening.
I heard a former economic adviser to George W. Bush speak a year or so ago. He said that if a one time surtax of 15% was applied to the top 2% of taxpayers, we could completely pay off the national debt. He went on to say that the increase would barely be noticed by those taxpayers. Then we could restructure the tax system and go forward with a more effective system. Mind you - this man was a Republican!
I have also heard lead economists say that we should not worry when the government borrows money because that is what all healthy businesses do when they want to expand and add new services. I am not sure that I completely buy that, but it is an interesting concept.
@Nance1 -
Two points Nance: First, we really don't want to pay off the national debt - it is the basis of our monetary system - what we should do is stop increasing the deficit - or indeed running a deficit at all. Second. the basic goal of any tax system should be to finance the government and that means that the government should find its financing where money is most plentiful and where those taxes might actually help the economic well being of most of the citizens. To tax accumulated funds and spend them in such a way as to help the citizens and boost the economy is a no brainer - except apparently to Republicans. Reducing the taxes on accumulated money simply means more and more is accumulated - and perhaps never passed back into the economy at all. romney's accumulated wealth is a prime example of this - he actually has to look for ways to put his money where it will grow and this is seldom into the "Active" economy. His fortune is basically just numbers accumulating.
Very worthwhile subject, thanks for sharing.
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