Rich People Don't Create Jobs...

Your first is in error because there is no demand for that which does not exist, be it good or service. The more disencentives to investment you have the less innovation you will have and the fewer goods and services you will have. The fewer goods and services you have the less demand for labor there will be and the lower the going rate for labor will be. It is a vicious circle invariably created by excessive government trying to justify it's own existence through more and more rules and regulations.
Your second does not at all address what he said. In fact, it isn't even in the ball park.

 

True. My employer is actually on welfare and pays me in food stamps.

 

Sure. But demand is a percursor.

You can have situations were there is inadequate capital. But we don't have that problem now. There are trillions in cash sitting in banks, corporations, and the offshore accounts of the very wealthy.

Our problem is lack of demand:


Year - % chng real personal expenditures
1982 1.4
1983 5.7
1984 5.3
1985 5.3
Average: 4.4

1992 3.7
1993 3.5
1994 3.9
1995 3.0
Average 3.5

2002 2.5
2003 3.1
2004 3.8
2005 3.5
Average 3.2

2010 2.0
2011 2.5
2012 2.2
2013 2.0
Average 2.2

Source data: http://bea.gov/iTable/iTable.cfm?ReqID=9&step=1#reqid=9&step=1&isuri=1
Table 2.3.1. Percent Change From Preceding Period in Real Personal Consumption Expenditures by Major Type of Product

Consumption spending growth is half what it was in the early 1980s. In every recover post the Reagan "trickle down" revolution, we see demand getting weaker, corresponding with the redistribution of income and wealth to the richest from the middle classes.

We've gutted our middle class with "trickle down" policies to enrich the richest, and abandoned Keynesian policies for austerity. And those are the consequences.

 

Tax policy for investment today is much more favorable than it was in the first half of the 1980s or mid 90s, when we had no problem with investment.

And we haven't had a shortage of investment now. We've seen huge bubbles in real estate and stocks as a result of abundant investment.

What we have a shortage of is business expansion.

 

Exactly. When you have less spending in the economy, there is less demand for labor, which puts market pressure on wages to keep them low, and keep profits high. That is exactly what we have seen the past few years.

So we should be trying to increase demand in the economy. The very worst thing to do in this situation is to reduce demand. But that is exactly what we have done with the unprecedented austerity spending decreases and eliminating over 1/2 million government jobs.

It absolutely does. His claim was that an increase in taxes causes employers to cut employees and salaries. That makes the faulty (and often repeated, as reflected in your post) presumption that tax is a cost that decreases profit. It does not. Business tax is a tax on profit, not a cost. It makes no sense for business to cut employees (or not hire more to meet demand) because that reduces profit, which reduces after tax income regardless of what the tax rate is.

 

The money they invested came from a good business strategy and a good product desired by the market.

If you have the consumer with the money and the desire to buy the product, but no one able to invest in the product and business strategy then you don't have jobs.

It starts with the business that has the investment resources and business strategy who then meets the needs of the consumer that create jobs.

Yep...it all starts with the "rich" or the jobs don't happen.

 

Of course the rich do. Job creation requires both supply side and demand side inputs. Usually supply aide inputs come from the rich - to say that the rich don't create jobs is just as fallacious as saying that spending does nothing to improve job creation of the economy. It's both.

But the key that is missed by left and right is that it isn't so important WHO IS taxed, but how much. There is always an economic loss when the government taxes - money taken out of the private sector. This is mitigated by government spending, but the government spending is never as efficient as a free private sector would have, and so the economic loss is always there. It's absolutely silly to deny that this loss is exists. What people advocating such spending programs should focus on is the benefit - which is often worth it. Yes, if we tax and spend to ensure no one starves, there is an economic loss - the benefit is the comfort of knowing that no one in our country goes without food.

It is silly to debt a reality because it is politically inconvenient. So many liberals try to do this because they somehow have the idea that if they accept that there is an efficiency loss to government then we won't have any welfare peograms. That's supremely silly.

 

Which branch of the armed services are you in?

 

Yep that is what his argument is. It really obfuscates the real reason that the economy stinks, and that is because the government is the one killing the economy through rampant spending, and taxation. I will not even get into bad trade deals, and regulation, because those are also obvious. We can thank the two parties for all of this.
Also Hanauer much like Buffet will talk a good game, but if he was indeed taxed at a much higher rate would figure a way to not pay it. Both of them apparently do take every advantage in the tax code to not pay with Buffet going to court over it. They do not volunteer to pay more, and until they do, they have no ground to stand on. I always say lead by example, and others will follow, talk without action and you will be ignored.

It is not from trickle down. Read above is why. The Republican have done nothing even remotely austere. The government has increased its spending as much as when the Dems are in power. The only thing they have done is cut the rate of that increase, so instead of say the EPA budget going up another $300 million, it goes up only$200 million. In DC that is considered a cut. So long as government does not get off the spending crack, we the people will suffer. Also Hanauer can volunteer to not take all of his cut outs, and pay more in taxes. Why don't you eamil him and ask if he has.

 

agree, all three play a part, the rich, the gov and mostly the consumer....

the rich of course decide if they create the jobs here in the usa or overseas (tax cuts should not go to those that outsource jobs)

we really need to concentrate more on the small business ... not the large corps when offering tax cuts imo

the right like to concentrate more on the corps... offer a tax cut with a cap... those benefit small businesses more and we get more bang for the buck

.

 

Lower demand creates lower pi\rices and more bankruptcies and even lower incentives for investment. It does not increase profits. Increases in taxes have to be paid for form somewhere. Hence new jobs and or business expansion are what increased taxes put at risk. Or alternatively the business must increase prices but in the face of poor demand businesses get squeezed. And ultimately layoffs will happen.

 

Again sir the chief problem today isn't tax rates but rather regulatory over burden. And a lot of that regulation is written into the tax code.

 

I agree. Which is why our economy is suffering from the effects of austerity policies and a middle class gutted by "trickle down" policies that have redsitributed so much income and wealth from the middle classes to the richest.

Or alternatively they are paid for in part our of lower after tax incomes to the owners. Moderate business tax increases do not hurt jobs because business taxes are not a cost, but are levied on profit. It makes no sense for businesses to cut jobs in the face of a tax increase because by cutting profit they are cutting profit.

Example. Assume a business where three employees can make 30 widgets a month that looks like this:

30 cost of raw materials
90 cost of three employees
---
120 CGS
300 revenue from 30 widgets sold
---
180 profit
18 10% tax
---
162 after taxes
​

Now if the tax is raised, to say 30%, it doesn't make sense for the business to cut an employee and make only 20 widgets:

20 cost of raw materials
60 cost of two employees
---
80 CGS
200 revenue from 30 widgets sold
---
120 profit
36 30% tax
---
84 after taxes​

But cutting an employee, the business is much worse off. It would be better to keep the three employees. Then:

--
180 profit
54 30% tax
---
126 after taxes​

The business is better off keeping the employees and profit, even if its after tax profit is lower because of the higher tax rate. It is still higher than the result of cutting production and making less profit.

 

It's not been refuted- not even close- and this thread is 6 pages in, still much to discuss.

Its pretty obvious to me that part of our economies problem is a lack of demand- and tax breaks for the rich don't seem to be having a positive impact on that. I think that the taxes should be restructured so that there is an effective tax break for the middle class.

I am not, and no one has, said that capital investment isn't an important part of how jobs are made, only that without powerful demand, all the investment in the world won't make a lick of difference to any but the super rich. We need to strike a better balance and strive to improve demand, that way investment finds more fertile ground and common Joe's find a more robust job market.

 

What specific regulations do you claim are over burdenning business so much that they cannot operate?

If it were true that this was the cause, we would have high demand for limited products caused by limited production.

We don't have that. We have an abundant level of products and inventories and production capacity. The problems isn't that business can't produce enough because of regulations.

The problem is that there is not enough demand int he economy, because the great engine of spending, the American middle class, has been gutted by 30 years of "trickle down" policies and now austerity, and they don't have the purchasing power to drive strong demand and thus a strong economy.

I just showed you the data.

 

i work for a Fortune 500. Hey wait a minute!!!! My company is run by a bunch of rich guys! They created my job! Rich guys DO create jobs!

 

Some people have the balls and brains to put everything on the line in order to make something of themselves and start a business. You want to socialize their successes amongst the masses who did nothing to earn it, but I don't see you Marxists lining up to socialize their failures, which are 100% theirs to own. They go bankrupt, while their workers are free to go apply for another job, with no further responsibility expected of them.

How much can we expect you to chip in this year to go towards business owners who failed to run a successful business? Are you going to step up and help the workers who got put out of a job? I didn't think so.

"Socialism" is no big mystery. I know you guys like to pretend that everyone else is too stupid to understand just how marvelous your ideology is, but in reality it's been around a long time. It's been tried many times. It's failed, many times. It's based on some of the worst qualities of humanity, such as greed, spite, jealousy, laziness, and ultimately violence.

 

I agree that a thriving middle class will bolster the economy however, taxing business more and more will only increase revenue to the government and government has proven over and over that it cannot create anything other than more debt in the private, free economy. The guy in the OP also forgets that government is responsible for killing energy jobs by the EPA using draconian regulation to block the building of nuclear plants and now, Obama wants to punish the coal fired plants that produce most of the electrical energy.

Sorry, the very LAST thing I trust for 'creating' jobs is government.

 

That all makes sense.

But the problem we have now is not insufficient capital for investment for business expansion, but insufficient demand to drive a healthy expansion of production.

 

I doubt it was. It was more likely lots of companies started by bunches of not rich guys and bought up by rich guys.

 

I agree that taxing business doesn't make a lot of sense. It makes them less competitive and to at least some extent they will pass some of the tax in the form of higher prices.

It makes far more sense to increase the tax on investment income and high salaries of those who benefit from the corporation instead.

Eliminating over 1/2 a million government jobs when we had high unemployment and the economy is struggling from lack of demand after the worst recession in 80 years isn 't the brightest move.

 

The tax returns a common man receives is sufficient to pay one month rent, the tax returns rich people receives increase their bank accounts.

 

I can guarantee you a rich guy created my job. And I'm grateful for it.

 

If you start taxing investment income then the vast majority of the working middle class will have their 401K accounts suffer. Increasing tax on the few that make high salaries will not even make a drops worth of difference.

Most tax revenue comes from taxing the middle class and the problem we have now is a significant number are not working due to draconian government taxation and government over-regulation of the private business sector that CREATE those jobs. So I don't see how taxing the 'rich' will solve anything.