Rich People Don't Create Jobs...

Which is significantly less than thirty years ago, or even ten.

 

I'm going to address these three items because their inter-related.

First and foremost a federal Value Added Tax (VAT) is unconstitution. While the Constitution does authorize tariffs, excise taxes, and income taxes it does not authorize a VAT (or a consumption tax).

When a "fair tax" is addressed it's not about envy or taxing out of spite. Primarily it's about addressing the fact that all dollars of income are not subject to the same tax codes (rates) while every dollar spends the same. It's the simply proposition that a "dollar is a dollar is a dollar" regardless of whether we address it as income or spending. The Capital Gains Tax on investments imposes tax rates on "unearned income" that's basically 1/2 the tax rate being imposed on the identical income for "earned income" with the exception that the long term capital gains tax on income up to about $70,000/yr (about 140% of median household income) is 0%.

Taxation on all dollars of income, the primary source of federal revenue for general expenditures, needs to be the same. It isn't which is why we have "unfair" taxation in the United States.

The secondary consideration is that not all households can afford to be taxed. All households have fundamental and necessary mandatory (involuntary) expenditures that they must fund on a daily, weekly, monthly, annual, and lifetime basis. Those expenditures must be met by some means of personal income and, if not, then there is the necessity for the difference to be funded either by government welfare and/or private charity. As noted these are not voluntary expenditures but instead mandatory (involuntary) expenditures for the household.

I've addressed "Fair Taxation" in another thread that actually covers more than just that. When I addressed who can and who cannot afford to pay federal income taxes I drew the line at median income (about $50,000/yr for a household of four) but that is not without a foundation. In 2012, during his presidential run, Mitt Romney pointed out that 47% of all American households have either a zero or negative income tax liability under our current tax codes which is indicative of the fact that they don't have enough income to pay income taxes. I've bumped this up to 50% for two reasons. First of all it's because it provides a buffer where a little more income than necessary exists and secondly because we track median income but not 47% of median income. Anyway, here's a except from my thread on fair taxation where it addresses the income tax.

This accomplishes several things and also results in some perhaps surprising benefits.

1. First and foremost it taxes all income, regardless of source, identically.
2. The replacement of all deductions and tax credits with an exemption based upon household size eliminates the unfair personal deductions based upon voluntary expenditures (e.g. writing off the interest on a million dollar mortgage when no one has to live in a million dollar home). The same exemption from any income tax applies to all households regardless of income so it's fair.
3. Because of the exemption the flat tax rate is inherently progressive without any need for different, progressive, tax rates.
3. Based upon an analysis of 2013 general spending authorizations (overwhelmingly funded by the income tax) and personal gross income for the year the tax rate would have been 29% to fund all of the expenditures (NO DEFICIT SPENDING!). Based upon our current "progressive" tax rates that are as high as 39.6% this is actually a 25% reduction in the tax rate and it still balanced the US budget.

Bottom line every dollar is a dollar when it comes to income, every household is exempt from any tax liability up to the household exemption level, and every household pays the identical tax rate on income above the household exemption level. This is as absolutely fair as any tax proposal can be and it's not based upon envy or spite.

This leave us with the final issue addressed by Forbes. Does this shift the tax burden to the wealthy and will they pay more in taxes? That depends. If we compare a CEO of a corporation that has a salary of $20 million then that salary is taxed based upon "earned income" today and they're currently in the 39.6% tax bracket. Based upon the analysis of 2013 their tax rate would drop from 39.6% to 29% so they would pay about 25% less in federal income taxes. On the flip side if the person is an investor with a $20 million annual income their tax rate would increase from a maximum of 20% on "unearned income" (from long term capital gains) to 29% increasing their taxation by roughly 50%.

Both would be paying the identical tax rates and identical tax amount on their $20 million in income.

The difference is that there are probably fewer than a handful of CEO's or other corporate executives with a salary of $20 million that are paying income taxes on "earned income" of that amount while there are many of thousands, perhaps tens of thousands, of investors paying the much lower Capital Gains tax rate on "unearned income" so the general revenues of the federal government would increase dramatically based upon fair taxation.

Post Script - I don't know if people are aware of this but the top 400 income households in the United States, all with incomes in excess of $250 million/yr, average a 17% tax rate based upon the capital gains tax which is the same tax rate a person with $90,000/yr in "earned income" pays today.

 

This is a misperception based upon the facts.

For example globalization. Many incorrectly believe that US manufacturing jobs are being "exported" to countries like China but that isn't exactly true. The US has lost about 40% of our manufacturing jobs per capita since 1970 but so has the rest of the world including China. These jobs have been replaced by Artificial Intelligence and Technology (AI&T) and not because they were "exported" to another country that's also suffering the same level of job loss in manufacturing. I worked in manufacturing for my entire career and I watched this happen.

AI&T for design engineering reduced the man-hours required by about 90%. Thousands of hours of calculations done by the mechanical engineers have been replaced by "smart" computers using design software. For every 2080 hours of labor replaced by the computer previously done by mechanical engineer there goes another high paying job in manufacturing. The number of people per capita capable of being a mechanical engineer hasn't changed so now employers have more "candidates" for the few jobs remaining and unopposed market forces drives the compensation down for the position.

The same can be demonstrated in the service sector if we address bank tellers. ATM's have dramatically reduced the necessity for bank tellers. What once required ten bank tellers at a branch now only requires two bank tellers. The number of people qualified to be bank tellers per capita hasn't changed but the number of jobs has been slashed because of ATM's, Now when a bank has an opening instead of just having one qualified applicant they have five and because they have five the market allows them to pay less for the position.

It is the unopposed downward pressure of the market where jobs are being replaced by AI&T that's been destroying the middle class in America and that's been happening since about 1970 when production was on the rise while compensation stagnated. The power of the unions, even while membership increased up until 1979 was in decline because the per capita membership was in decline.

The unions have a positive influence on compensation, counteracting the negative influence of the market, and that balance was lost because of "union busting" policies advocated by the "right wing" politicans and think tanks.

We lost that balance between the competing positive and negative forces effecting compensation that was critical in creating the middle class in America. With the loss of the middle class we also lost the steps in the rungs of the economic ladder with more and more people are competing for the middle income jobs. With more qualified competition for the remaining middle income jobs the unopposed market forces relentlessly drive the compensation down even farther removing more and more rungs in the economic ladder.

We're in an economic death spiral and unless we restore balance in the forces affecting compensation (i.e. organized labor v market forces) there's no way out.

 

While corporations employ almost 30% of all workers they only represent about 5% of all enterprises. That still leaves up to 95% of all employers and up to 70% of all workers that didn't have employer provided health insurance. That statistic should change based upon the Employer Mandate under Obamacare but it doesn't for "small" enterprises with less than 50 fulltime employees (if I remember correctly) and there's a metric-butt-load of those out there employing a significant percentage of the workforce.

 

ALL PEOPLE, rich and poor, create jobs when they spend. It makes no difference if 100 people are spending $100 each or one person is spending $10,000...all of them with their spending are energizing the economy...

 

It absolutely makes a difference when 100 people spend $100 each, but one person spends $5,000 and sticks the other $5000 in an offshore account.

 

You will always and forever FAIL at convincing anyone that the wealthy don't spend their money! ALL PEOPLE spend their money and do so as they desire but somehow you feel there should be a mandate that all people spend the same rate. It makes no difference to you that one person spends $50K while another spends $1 million that you complain the one spending $1 million is not spending enough? And then you complain that some people save their money, invest their money, as if this is somehow evil? Once a person pays taxes on their income, they can do what they wish with their money from spending to saving to investing to offshore yet you seem to want to mandate how others handle their money? This borders on baseless and/or jealousy...

 

Wrong. It has been 70 to 80% for my entire working life a period that expends for nearly forty years In fact the only job I ever had in which the company didn't cover it was when I taught school back in the seventies when every benefit I got I paid for myself.

 

Dude this day and age even mom and pops are incorporated. You do Know what an LLC is don't you.

 

consumers have to have money, if they have no money to spend.... no jobs will be created

 

I'll trust all but the most obtuse of our members very well understand my discussion of the facts demonstrating that the very rich tend spend a much smaller portion of their income than a typical middle class family. Therefore, in the aggregate, when more of the national income goes to the rich and less to the middle classes, proportionally less money is spent in the economy.

This occurrence is reflected in data showing consumption spending growth declining as a larger and large portion of the nation's income is going to the rich instead of the middle class, which I've posted many times.

And since consumption is about 70% of GDP, when aggregate spending is curtailed, the economy suffers.

I've explained this to you several times before, but you continue in making this sophomoric straw man arguments, as if I've claimed that the rich spend no money.

Why you persist in doing this I'll let others decide for themselves.

 

You personal anecdote is, of course, evidence of nothing.

Statistical evidence shows that fewer employers provide health care to their employees.



I'm fairly cerain that percentage has dropped even further with the GR.

 

The reference is to publically traded corporations and not closed corporations or LLC's.

 

It should also be noted that with the decline in income (median household income declined by 5% in real dollars since 200 we are also seeing the effects of government welfare becoming more of a prop to consumer spending. For example SNAP benefits increased four-fold since the 2008 recession to almost $80 billion/yr and those funds contribute to consumer spending, predominately at markets, producing a significant benefit to our economy. Without government welfare programs our consumer spending would be significantly less and the economy worse off than it already is.

 

Depending on the final results of the Employer Mandate under Obamacare that should change significantly for the better. Of course the "out" for enterprises that typically use part time labor and for enterprises with fewer than 50 full time employees was a serious flaw in Obamacare when it comes to ensuring maximum health care benefits for working Americans. It also provided an unfair competitive advantage to many enterprises near the criteria break because an employer with 45 full time employees or that uses part time labor doesn't have the health insurance expenses of one with 55 full time employees that provides the insurance and they gained a significant cost advantage by not providing health care benefits. All enterprises should have the same obligation to level the playing field.

Republicans actually complained about this but didn't do anything to fix the law because they really didn't care. It was just a "political shot" at Obama with no intentions of actually making Obamacare better and doing what's right for millions of American workers.

Additionally it was a huge mistake for President Obama not enforcing the employer mandate in 2013 as that was far more important for working Americans than the Individual Mandate.

 

That's great news. One's health insurance should not tie one to his employer. Life insurance, homeowners, auto. None of these are provided by employers, and we don't have any sort of crisis associated with them.

One should not have lose his insurance coverage just because he changes jobs.

 

But while that has helped out families and spending, in the aggregate, Govt spending has been a negative since 2009, along with over half a million jobs eliminated by governments of different levels.

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Completely agree.

 

So basically then the numbers you provided are meaningless. I've only worked for one publically traded company in my life and it is defunct - purchased by another such.

 

It's a survey. Please what is the margin of error on a survey? And once the Obama care mandate kicks in I guarantee you it'll drop more. And please we are talking about different things. And what your chart proves has nothing to do with what I said, which is that most employer who provide health care coverage are covering 70To 80% of the cost.

 

And Capitalists also have to have money to invest, it takes two to tango, but exceedingly wealthy people generally have access to a lot more money than is even necessary for this. Supply and demand. All research done over the last century and a half has shown that there is a sweet spot in taxes, too little taxes and it hurts the economy, too high of taxes and it hurts the economy, but we're definitely NOT on the too high side right now. Anyone who thinks taxation amounts to stealing is completely ignorant. Nearly every tax dollar spent is a benefit enjoyed by everyone. Someone in poverty might receive $30,000 in tax dollars during their educational years, but upon graduating, that person will contribute $200,000 more in revenue to the government over their lifetime then they received, and they will spend over $1.5 million dollars into the economy over their lifetime earning a median wage, they'll be less likely to commit crimes considering they have a career, be better citizens etc. etc., that's an investment that has returns for everybody, even if you don't personally get the cash in tax dollars yourself, it's good for us all. Taxing the wealthy DOES help the middle class, because those tax dollars can be used to run programs that help to build the middle class, like education, job training etc. Educated and/or trained people help the investor by providing necessary skills to grow their company, everybody wins. When there is a weak middle class, the money sits a the top. Why would someone invest in a product if the chance of it being successful and people buying it low? If they do that sounds like a poor business strategy. Both the capitalist class and the middle class are interdependent on each other for optimum success, the middle class guy probably works for the capitalist and buys other capitalists products, the capitalist has the money to create those products and jobs, but only if there is a demand for them. Supply side economics is a false ideology. Its always been supply and demand, there is no supply without demand.

 

Sorry but job losses from offshoring and automation are not mutually exclusive. Both have resulted in job losses in the United States. And China's job losses are partially because even cheaper sources of labor have become available so now China is outsourcing some jobs.

 

Sorry but personal experience does not trump facts and the fact is that employers have been paying a lower and lower percentage of employees health insurance costs and the number of employees covered by employer sponsored health insurance has been on the decline for decades.

 

the 10% already have the money to invest... if your talking about tax cuts for the middle class that want to start a business, yes, that could help create Jobs... I am all for that, not for the top 10%

you get more bang for the buck giving the 80% a tax cut then the top 10% an extra super sized tax cut...

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Here is the problem with all this. The term "Rich" is subjective. In a liberal administration's eyes particularly Obama's administration, unless you're dirt poor you should be punished for having barely enough money to support yourself. I honestly can say I was on Social Security Disability which I am now not on. Since I am not receiving funds and am making a measly $14.00 an hour that is considered a substantial amount of money as far as the federal govt is concerned. I was taxed higher and I was thrown off SSD. It doesn't matter that I'm barely making ends meet or that I have a lifelong disability. The more you work and the more you try to provide for yourself, your family, etc. it makes you "rich" and it means you deserve to be taxed. And I'm saying this from personal experience. I'm not even really middle class I'm upper poor and I'm getting banged for more money and penalized especially when I work overtime. The harder you work the more the government punishes you.