If you give a rich guy a tax break, there’s no way of knowing if he’s going to use the money to create jobs, or buy himself a solid gold toilet. Can’t there be a way to reward rich guy after the jobs are created? Seems like that would be more of an incentive.
In case it’s not obvious, I know nothing about economics 
Buying a solid gold toilet creates jobs. Some middle-class guy had to make the toilet. Another one had to smelt the gold. Etc. Spending money on things middle class people make creates jobs, just as much as starting a company creates jobs.
It doesn’t create American jobs if you buy it outside the country.
Job Creator could also become Job Exporter-Destroyer - fire his factory workers and invest the money saved on taxes in replacing them with the latest German robotics.
Yes. That was the way it used to work. Eisenhower raised the top tax rate to 90%. But no one paid that, they were able to invest in ‘tax shelters’ to decrease their tax liablility, and those shelters were huge jobs producers as well as investments in domestic growth. Even when abused to some degree, they kept the rich guy’s brother in law out of the public trough. The Reagan voodoo economics finished the dismantling of that system based on the idea that rich people will invest in the economy out of the goodness of their hearts. But without restrictions to require domestic investment this system wouldn’t work in the modern world. There are too many ways to invest in the economy of other countries now. If we keep on our current ‘job creator’ policy we’ll end up like England post WWII when we can’t milk our ‘colonial’ holdings anymore.
Are you sure it wasn’t to keep more investment money in rich folks’ hands by creating fewer jobs - targeting growth so it would only trickle down, not cascade?
It didn’t work well at doing that. It resulted in tremendous growth during the 50s and into the 60s. The grumbling was mostly muffled until the huge upsurge of government spending in the 60s turned a budget surplus into a deficit in no time. It didn’t keep money in anyone’s hands unless they wanted to pay exhorbinant tax rates. What is the alternative, taking the money without giving the taxpayer a chance to invest it himself?
Operated in China by people who make $30 a month.
Once in a while you fly an Engineer over there to tweak the robots, but because American engineering is kind of lagging, the engineer is probably German, Indian, or you get him in China.
I spent a dozen years working for a manufacturing company (I don’t anymore). They make more widgets than they ever did - three times the amount they did when I started. When I started there were 30,000 jobs in the U.S. and 30,000 overseas. Now - less than 10k in the US, but only 20k overseas. We didn’t move the jobs, we automated them away.
Give those guys more money to invest,and they’ll buy more robots in China. That’s the best use of their investment dollar. They didn’t get rich by making dumb investment decisions - like investing in high priced U.S. labor when a machine will pay for itself in 18 months.
Wrong “it.” I was unclear; I meant voodoo.
I wonder about this, too (and am equally economically ignorant).
If one wants to use tax breaks to stimulate job creation, wouldn’t it make a lot more sense to offer tax breaks to corporations based on hiring?
Oh yeah. That was all about rich guys controlling the economy. I always read the ‘voodoo’ part as the idea that eventual increased revenues would eliminate the huge deficit created by the new lack of revenue, but it was still the justification for the [del]pissing on us[/del] trickle down theory.
In the context of tax policy “job creators” are a myth that politicians use to convince the 95% that they benefit from tax breaks for the 5%.
The one major factor is that businesses pay taxes on their net profits so “the money they would have used to hire someone will go to taxes” arguement brands them as either a liar or someone with an incompetent accountant.
To the extent that they might buy something with the tax break and increase demand a tax cut could create jobs. But in that case, giving the break to someone likely to spend it would have a better effect.
But the guy already has a solid gold toilet in every bathroom. In fact he has everything he wants. If you gave that tax break to someone with a bit less money, they’d actually buy stuff that helps the economy. Sure lots of it is made in China, but at least it gets bought from American companies.
Now the guy doesn’t invest in new jobs because no one has the money to buy stuff that the new production would make. Tax incentives don’t help because if the created job is not necessary, no amount of tax incentives is going to make it worth creating. You can also cheat - division A lays off N people, division B hires N new people, bingo, tax breaks!
Where does the money go now? Into bonds, into bidding up stock prices. Before the crash it wanted high returns, so it went into high yield instruments made up of junk mortgages.
If we used that money to hire back all the public sector workers who got laid off to balance state and municipal budgets, our picture would improve tremendously - and so would public services.
If there’s no demand, then there will be no reason to hire workers, regardless of tax cuts. They’ll stuff the extra money in mattresses before they’ll hire unneeded workers.
If there’s increased demand, then companies will hire workers to meet that demand, regardless of tax cuts. They will borrow the money if necessary and banks will gladly lend it.
But this is a process that’s been going on since before the industrial revolution. In reality it makes everyone’s lives better. And historically, as new technological advancements have arrived, workers have been displaced - but historically, the displacement is temporary (labour finds another place to be, and things to do)
To really describe what’s happening. Before the Agrarian Revolution, food production literally required all hands on deck. It would take all or at least part of a persons labour just to produce enough agricultural produce to survive. There were few industrial goods or services, because everyone was out farming in the fields. With advancements in agriculture, displaced agricultural workers found work in producing industrial goods - the manufacturers could afford to hire them. (There is some economics to this I won’t go into explaining - but it’s simple as while it took so much labour to produce agricultural goods, that labour was not free to produce manufactured industrial goods). With advances in manufacturing, workers were displaced - but this allowed more workers to be free for even more manufacture.
Pre-agrarian revolution. It took a day of back breaking work to buy a loaf of stale bread and a jug of sour beer. Life was crap.
Rich guys like Mitt Romney are actually morons. But money is wonderful, in that if you have lots of it you don’t need a brain - you can buy the brains like any other product or service. The brains tell him how to hide his money off-shore, they tell him where to invest it. The guy can’t tell a Sikh from a Sheik, and probably honestly believes Obama was sympathising with the Islamic terrorists who killed the embassy staff in Libya.
The reason China has leaped ahead like it has, hasn’t been through automation. It’s simply cheap labour. And patriots like Romney giving them cash to buy machines from Germany and the US. Machines always need operators. All Homer Simpson does in his job is press a button. And Romney and his friends syphon off the cash into their off-shore bank accounts.
The more automation, and tools available to a labourer, the more they can do. And generally everyone feels the benefit.
You need learn more about American history. Effective tax rates were reduced significantly during the Eisenhower Administration.
No doubt. But actual income tax rates were raised to 90%. The intent and the result was to spur economic investment.
In 1953, when Eisenhower took office, Americans who made over $1,000,000 AGI paid 49.3% of their income in taxes.
In 1961, when Eisenhower left office, Americans who made over $1,000,000 AGI paid 27.2% of their income in taxes.
That is a 45% reduction of the effective tax rate that millionaires paid during the Eisenhower years.
SOURCE: William Williams, The Changing Progressivity of the Federal Income Tax (1964)
…was the title of one of Laura Numeroff’s less-popular books.
If you give a rich guy a tax break, he’ll want to buy a solid-gold toilet.
If you sell him a solid gold toilet, he’ll want to take a crap in it.
The crap will remind him of the lazy high-paid American workers in his factory. He’ll want to ship them overseas.
If he ships his workers overseas, he’ll start making a lot more money.
And chances are, if he starts making a lot more money…
He’ll want a tax break!