We’ve been hearing for years now we can’t raises taxes on the top two percent because it’ll limit their ability to hire. Well, after more than a decade of this, where are the jobs? Considering the wealthy have amassed more wealth than at any time since the Guilded Age, clearly they’re not investing much of their largesse into job creation. There certainly are a lot of potential jobs sitting in their bulging overseas bank accounts. At the same time they’re demanding a massive reduction in government spending, including needed infrastructure improvements that would, get ready for it… create jobs. Isn’t this an instance where taxing the wealthy would lead to more job creation than leaving their tax cuts in place?
They are told that the rich really have their interests at heart, and even poor schlubs like Joe the Plumber will surely become rich, so they should vote for the party of the rich. Since we all agree that jobs are important, the rich will clearly create a lot of jobs if they just had a few more dollars and relief from these oppressive lowest in decades taxes. As you point out, that it hasn’t worked doesn’t affect them at all.
It’s like a religious tenet for them. They are like economic creationists - here is the holy book, and don’t bother me with the facts.
Business don’t create jobs because they have extra money that needs spending. They create jobs because they have work that needs doing.
I don’t know their names, but they’re all very gullible people. The major advocates don’t believe it themselves. If a reasonably intelligent person tells you they believe this, they’re probably lying. Remember that this version of supply side economics didn’t take hold until the previous versions created the current economic crisis.
Capital formation happens only with savings. The wealthy tend to have the most savings so these savings can be invested in capital. If these savings are not being invested in capital it is probably because of uncertainty. There is no other explanation for the hording of cash. The market is sending confused signals to investors for different reasons.
This is the crux of the matter. The hypothesis that lowering taxes will always create jobs is not a completely ludicrous proposition at first glance. But it’s not borne out by reality. At all. Like you said: where are the jobs?
So are you suggesting that there would be more jobs if we took more money from employers? Economic empiricism in an impossibility.
Yes; ordinary people having more money to spend would increase demand, and therefore create a reason to hire people to meet that demand.
Of course there is; most obviously, they don’t have any reason to hire more people or to invest. They don’t hire people out of the goodness of their hearts; they do it because there’s no other way to meet demand. If demand stays stagnant or can be met by squeezing their present workforce harder, they’ll just sit on their money.
I think he’s suggesting that there wouldn’t be any meaningful amount less.
I think it’s something like 97% of small businesses are below the increased tax number. So thinking it would meaningfully impact business is a little silly.
On top of that businesses hire people when there is demand for their product or service that can’t be met with existing payroll. Certainly if we had raised taxes on the top few percent when they should have expired, we could have cut less and would have more public sector employment. That employment would have driven demand more and probably helped much more than any small amount the tax cuts would have.
The most obvious reason for hoarded capital is that investors would be stupid to build a new McBurgerhut when the existing McBurgerhuts are barely hanging on.
In many situations there will be. The obvious two are when you can use the taxes to support the economy (such as, at a minimum, the rule of law,) and when deficits are so high that the pain of higher taxes is overshadowed by the risk of a government default.
A decade? Republicans have been cutting taxes since Reagan. They are the cure for everything from economic uncertainty to gout. The whole Job Creators[sup]TM[/sup] thing may be recent, but for 30 years they’ve been saying that tax cuts lead to increased economic activity, which certainly suggests increased jobs.
If it actually worked, we’d be up to our eyeballs in jobs by now.
Business owners don’t create jobs, any more than oil companies create oil. Business owners harvest demand; employees are the machinery that make that possible. No demand, no jobs.
But they only have work that needs doing if there is a thriving middle class that is buying what they’re selling.
In order to answer this question meaningfully in terms of the past decade, we’d have to get in a time machine, go back to the year 2000 or so, cancel the tax cuts on the eeeeeevil rich, and then see how things play out.
In other words, the question “If tax cuts create jobs, where are the jobs, then, huh, huh?” is meaningless. For all we know, without the tax cuts, unemployment would be much higher than it is now. It’s not a proposition I’m prepared to debate as it would be counterfactual history.
Let’s set aside the populist anti-rich rhetoric for juuuuust a moment. Taxing the rich reduces the supply of capital; whether you love or hate the rich, this is a basic truth. Taxing earnings–whether corporate or personal–increases the risk/reward ratio for capital investment, because it reduces the potential reward while doing nothing to reduce the risk. An eeeeevil rich person is less likely to open up a business if we raise his tax rate, because he’ll make less money if he succeeds, but lose the same amount if he fails.
I’ve actually heard people counter this argument by saying, in effect, that all rich people are like Scrooge McDuck and have giant basement vaults filled with cash that they like to go down to and roll around in for fun, so what’s the difference if we hit 'em up for a couple extra million. The trouble is, economics is all about incentives. If you set up your tax structure so that it discourages investment and risk-taking, by those who are the primary movers of such activities, you will naturally see a reduction in the amount of capital available in the capital markets–and that is what creates jobs–availability of capital.
To be fair, Saint Ronnie saw the error of his ways and raised taxes eleven times after he cut them. Oh, and in 1986 he said that a bus driver shouldn’t pay a higher tax rate than his employer.
It was my understanding that buying new equipment and buildings, or paying wages and benefits were tax deductible, so corporations don’t pay taxes on those anyway. So I don’t know why it would matter what the tax rate on net profits is.
In the current economy the income and wealth of the top 1%, corporate profits and corporate cash reserves are all at record highs. Corporate profits are 3x what they were about 10 years ago, income for the top 1% are about 3x what they were 30 years ago, etc. Even with the role of capital, tripling the income of wealthy individuals and corporate profits has not created jobs. Corporations have something like 2 trillion in cash they aren’t using because there are no investments. There is no demand for any goods or services, so they do not expand their businesses or hire new workers. If corporate profits jump to 4x what they were 10 years ago instead of 3x, that isn’t going to change that problem.
You are confusing quite a few different concepts:
Profits can either be retained with the company–“retained earnings,” distributed to shareholders–“dividends,” or invested in equipment, buildings, etc.–“capital improvements.” Each of these is treated differently for tax purposes.
In terms of capital improvements, corporations are allowed to pay lower taxes on profits that are reinvested in capital improvements than if they had retained or disbursed those profits. (Strictly speaking, they are allowed to defer some taxes.) It is wildly inaccurate to say that corporations pay no taxes whatsoever on profits reinvested in capital improvements. The favorable tax treatment is meant to encourage modernization and improvements, but they still do pay taxes on those reinvested profits.
Wages and benefits are expenses, and so are figured into the company’s profit and loss statement before taxes are ever calculated. As with any other companies, taxes are paid on the net profit, not the gross profit.
You didn’t seem to understand what I meant so I’ll restate it more simply.
We don’t know if the last decade’s tax policies helped or hurt job creation. There is no way to go back in the past, change those policies, and see if it would have made any difference.
You seem to view increased corporate profits as an inherently bad thing, and the existence of the rich as likewise an evil. I submit that there have been times in our history when corporate profits reached record lows, and those time weren’t much fun for anybody.