Raise Taxes on Rich to Reward True Job Creators: Nick Hanauer

[PhanLord]

Interesting

http://www.bloomberg.com/news/2011-12-01/raise-taxes-on-the-rich-to-reward-job-creators-commentary-by-nick-hanauer.html

[FayeforCure]

The folly of supply side economics explained by a 0.1 percenter:

But it’s equally true that without consumers, you can’t have entrepreneurs and investors. And the more we have happy customers with lots of disposable income, the better our businesses will do.

That’s why our current policies are so upside down. When the American middle class defends a tax system in which the lion’s share of benefits accrues to the richest, all in the name of job creation, all that happens is that the rich get richer.

And that’s what has been happening in the U.S. for the last 30 years.

Since 1980, the share of the nation’s income for fat cats like me in the top 0.1 percent has increased a shocking 400 percent, while the share for the bottom 50 percent of Americans has declined 33 percent. At the same time, effective tax rates on the superwealthy fell to 16.6 percent in 2007, from 42 percent at the peak of U.S. productivity in the early 1960s, and about 30 percent during the expansion of the 1990s. In my case, that means that this year, I paid an 11 percent rate on an eight-figure income.

One reason this policy is so wrong-headed is that there can never be enough superrich Americans to power a great economy. The annual earnings of people like me are hundreds, if not thousands, of times greater than those of the average American, but we don’t buy hundreds or thousands of times more stuff. My family owns three cars, not 3,000. I buy a few pairs of pants and a few shirts a year, just like most American men. Like everyone else, I go out to eat with friends and family only occasionally.

It’s true that we do spend a lot more than the average family. Yet the one truly expensive line item in our budget is our airplane (which, by the way, was manufactured in France by Dassault Aviation SA (AM)), and those annual costs are mostly for fuel (from the Middle East). It’s just crazy to believe that any of this is more beneficial to our economy than hiring more teachers or police officers or investing in our infrastructure.

More Shoppers Needed

I can’t buy enough of anything to make up for the fact that millions of unemployed and underemployed Americans can’t buy any new clothes or enjoy any meals out. Or to make up for the decreasing consumption of the tens of millions of middle-class families that are barely squeaking by, buried by spiraling costs and trapped by stagnant or declining wages.

If the average American family still got the same share of income they earned in 1980, they would have an astounding $13,000 more in their pockets a year. It’s worth pausing to consider what our economy would be like today if middle-class consumers had that additional income to spend.

Instead of envy of the rich, we've had the "I might to be rich one day too, so I need to protect the rich at the expense of my own at all costs" for the past 30 years.

And as the author says, Democrats haven't defended Demand side economics with the same fervor as Republicans have propagated the supply -side economics folly:

It is a tenet of American economic beliefs, and an article of faith for Republicans that is seldom contested by Democrats: If taxes are raised on the rich, job creation will stop.

Trouble is, sometimes the things that we know to be true are dead wrong. For the larger part of human history, for example, people were sure that the sun circles the Earth and that we are at the center of the universe. It doesn’t, and we aren’t. The conventional wisdom that the rich and businesses are our nation’s “job creators” is every bit as false.

http://www.bloomberg.com/news/2011-12-01/raise-taxes-on-the-rich-to-reward-job-creators-commentary-by-nick-hanauer.html

[Dog Walker]

Let's put the idea to the test. 

Germany has one of the highest and one of the most progressive income tax schemes in the world.

Right now it also has the lowest rate of unemployment in the developed world.

Ta Da!

[danem]

Our government needs to stop throwing money away on giveaways to political donors, big banks, and vote-buying programs first, before it starts talking about raising tax rates on anyone. Discussion of huge debt aside, it seems to me that with the same amount of money that was spent on "stimulus", we could've had roads and trains lined with gold and all schoolchildren expertly taught rocket science by the third grade. We could also save a lot of money by not having our military being the world's policeman, but that's another subject.

[danem]

Let's put the idea to the test. 

Germany has one of the highest and one of the most progressive income tax schemes in the world.

Right now it also has the lowest rate of unemployment in the developed world.

Ta Da!

I'm reading about Germany's situation right now, it's very interesting. The word so far is that that country is very disciplined not only in its government spending, but apparently the spending of its people. It's also very export driven. So far, I am not sure if the comparison with the U.S. is apples to apples.

[JeffreyS]

The title on this article is bad but the thought is dead on. Many shoppers with money make the economy run not a few wealthy individuals. We need to switch from supply side to demand side economics. If there is demand someone will rise to meet it. Having a supply is no guarantee of demand