Tags: Obamacare, political cartoons, political humor, taxing the rich, the 1%
Tags: Bush tax cuts, Nick Hanauer, Republicans, Tax, the 1%, United States
…or would you starve, would your kids suffer and be denied an education, would you lack healthcare if you paid more taxes? Or is that what you’re hoping for the 99% of us that didn’t have the foresight to be born into wealth and privilege?
Raise Taxes on Rich to Reward True Job Creators: Nick Hanauer
Dec. 1 (Bloomberg) — 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.
I’m a very rich person. As an entrepreneur and venture capitalist, I’ve started or helped get off the ground dozens of companies in industries including manufacturing, retail, medical services, the Internet and software. I founded the Internet media company aQuantive Inc., which was acquired by Microsoft Corp. in 2007 for $6.4 billion. I was also the first non-family investor in Amazon.com Inc.
Even so, I’ve never been a “job creator.” I can start a business based on a great idea, and initially hire dozens or hundreds of people. But if no one can afford to buy what I have to sell, my business will soon fail and all those jobs will evaporate.
That’s why I can say with confidence that rich people don’t create jobs, nor do businesses, large or small. What does lead to more employment is the feedback loop between customers and businesses. And only consumers can set in motion a virtuous cycle that allows companies to survive and thrive and business owners to hire. An ordinary middle-class consumer is far more of a job creator than I ever have been or ever will be.
Theory of Evolution
When businesspeople take credit for creating jobs, it is like squirrels taking credit for creating evolution. In fact, it’s the other way around.
It is unquestionably true that without entrepreneurs and investors, you can’t have a dynamic and growing capitalist economy. 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), 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.
It is mathematically impossible to invest enough in our economy and our country to sustain the middle class (our customers) without taxing the top 1 percent at reasonable levels again. Shifting the burden from the 99 percent to the 1 percent is the surest and best way to get our consumer-based economy rolling again.
Significant tax increases on the about $1.5 trillion in collective income of those of us in the top 1 percent could create hundreds of billions of dollars to invest in our economy, rather than letting it pile up in a few bank accounts like a huge clot in our nation’s economic circulatory system.
Consider, for example, that a puny 3 percent surtax on incomes above $1 million would be enough to maintain and expand the current payroll tax cut beyond December, preventing a $1,000 increase on the average worker’s taxes at the worst possible time for the economy. With a few more pennies on the dollar, we could invest in rebuilding schools and infrastructure. And even if we imposed a millionaires’ surtax and rolled back the Bush- era tax cuts for those at the top, the taxes on the richest Americans would still be historically low, and their incomes would still be astronomically high.
We’ve had it backward for the last 30 years. Rich businesspeople like me don’t create jobs. Middle-class consumers do, and when they thrive, U.S. businesses grow and profit. That’s why taxing the rich to pay for investments that benefit all is a great deal for both the middle class and the rich.
So let’s give a break to the true job creators. Let’s tax the rich like we once did and use that money to spur growth by putting purchasing power back in the hands of the middle class. And let’s remember that capitalists without customers are out of business.
(Nick Hanauer is a founder of Second Avenue Partners, a venture capital company in Seattle specializing in early state startups and emerging technology. He has helped launch more than 20 companies, including aQuantive Inc. and Amazon.com, and is the co-author of two books, “The True Patriot” and “The Gardens of Democracy.” The opinions expressed are his own.)
To contact the writer of this article: Nick Hanauer at Nick@secondave.com .
To contact the editor responsible for this article: Max Berley at email@example.com .
Find out more about Bloomberg for iPhone: http://m.bloomberg.com/iphone/
Tags: corporate greed, Flint Michigan, Franklin D. Roosevelt, General Motors, MichaelMoore, Michigan, New Year's Eve, Occupy Wall Street, the 1%, United Auto Workers, Wall Street
Due to personal issues I am on a (hopefully short) hiatus from blogging. However from time to time I receive something I think worthy of sharing…which takes less time than actual blogging.
75 Years Ago Today, the First Occupy …a note from Michael Moore
Friday, December 30th, 2011
On this day, December 30th, in 1936 — 75 years ago today — hundreds of workers at the General Motors factories in Flint, Michigan, took over the facilities and occupied them for 44 days. My uncle was one of them.
The workers couldn’t take the abuse from the corporation any longer. Their working conditions, the slave wages, no vacation, no health care, no overtime — it was do as you’re told or get tossed onto the curb.
So on the day before New Year’s Eve, emboldened by the recent re-election of Franklin Roosevelt, they sat down on the job and refused to leave.
They began their Occupation in the dead of winter. GM cut off the heat and water to the buildings. The police tried to raid the factories several times, to no avail. Even the National Guard was called in.
But the workers held their ground, and after 44 days, the corporation gave in and recognized the UAW as the representative of the workers. It was a monumental historical moment as no other major company had ever been brought to its knees by their employees. Workers were given a raise to a dollar an hour — and successful strikes and occupations spread like wildfire across the country. Finally, the working class would be able to do things like own their own homes, send their children to college, have time off and see a doctor without having to worry about paying. In Flint, Michigan, on this day in 1936, the middle class was born.
But 75 years later, the owners and elites have regained all power and control. I can think of no better way for us to honor the original Occupiers than by all of us participating in the Occupy Wall Street movement in whatever form that takes in each of our towns. We need direct action all winter long if we are to prevail. You can start your own Occupy group in your neighborhood or school or with just your friends. Speak out against economic injustice at every chance you get. Stop the bank from evicting the family down the block. Move your checking and credit card to a community bank or credit union. Place a sign in your yard — and get your neighbors to do it also — that says, “WE ARE THE 99%.” (You can download signs here and here.)
Do something, anything, but don’t remain silent. Not now. This is the moment. It won’t come again.
75 years ago today, in Flint, Michigan, the people said they’d had enough and occupied the factories until they won. What is stopping us now? The rich have one plan: bleed everyone dry. Can anyone, in good conscience, be a bystander to this?
My uncle wasn’t, and because of what he and others did, I got to grow up without having to worry about a roof over my heads or medical bills or a decent life. And all that was provided by my dad who built spark plugs on a GM assembly line.
Let’s each of us double our efforts to raise a ruckus, Occupy Everywhere, and get creative as we throw a major nonviolent wrench into this system of Greed. Let’s make the politicians running for office in 2012 quake in their boots if they refuse to tax the rich, regulate Wall Street and do whatever we the people tell them to do.