Editor’s note: Recently I wrote a column
about requesting “substance” for an opinion from the left. While there
are some jumps in logic and unconsidered aspects of the topic, the
point may be worthy of note. Or not. You decide.
Truthout...
Actually, “the Rich”
Don’t “Create Jobs,” We Do
Saturday 14 May 2011
by Dave Johnson, Campaign for America’s Future
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 becausethose 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.
Read it with links at Truthout
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