Millionaires, Taxes And Jobs
http://thedianerehmshow.org/shows/2011-12-12/millionaires-taxes-and-jobs
In an interview on cbs sixty minutes last night, president Obama said the very rich can afford to pay a little more in taxes. In a major speech last week, he argued that even before the recent recession, Americans at the top of the income scale managed to keep their effective tax rates low and grow wealthier than those in lower brackets. Republicans accuse the president of engaging in class warfare. They say tax hikes on the wealthy would be a strike against those in a position to create new jobs. In this hour, a panel joins Diane to discuss taxing millionaires and the effect on creating new jobs.
Guests
Tamara Keith
NPR congressional reporter
Eric Toder
fellow, Urban Institute, and co-director, Urban-Brookings Tax Policy Center.
David Kocieniewski
New York Times reporter, author of the series "... But Nobody Pays That"
Comments
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The most regressive taxes are the payroll taxes. Unfortunately, the myth of the necessity of the social security trust funds keeps them from being touched. They are one of the first taxes to consider for elimination. This would lower costs for business which would keep prices down and increase income for workers.
The income tax is also a source of concern due to the very high compliance costs. These include all of the record keeping, accountants, lawyers, courtrooms, most of the insurance industry, a substantial offshore sector, etc. etc. I estimate the real compliance costs of this tax are somewhere in the range of 5-15% of GDP.
Sales taxes act as millions of self imposed tariffs that discourage trade within our borders and reduce our standard of living as benefits of comparative advantage and specialization of labor are punished and discouraged.
I think the most efficient tax we have is the real estate tax. It can be made progressive as much as desired and can be designed to do things like minimize energy usage as well. It is readily enforceable at low cost, and the infrastructure is already in place at the local level. In theory, a Federal real estate tax could entirely replace the Federal income tax and sales taxes as well.
Source: Warren Mosler www.moslereconomics.com
We cannot lump all higher earners, or high tax payers, together if we are considering giving them lower taxes because of their job-creating capacity. We may need to recognize differences between active business people and persons whose income is from something other than an active business. We may even need to consider whether the high earner is in a position to influence hiring (Lawyers probably aren't in such positions, but Operations Managers may be). Should they pay different taxes?
Obviously, we can get carried away with this. Our tax code is already too complex. How about a simple approach, that doesn't justify tax breaks because of job creation potential. How about a tax rate merely based on disposable income?
This conversation is a side show.
The rate of federal government growth rarely enters into the conversation when discussing proposed tax increases. Keep in mind that state and local government spending is not even figured into the below figures. Anyone can plainly see the appetite for more money to fund government programs is insatiable. We are in serious trouble and the government put us in it and to make things worse an honest discussion about government spending is a taboo subject because an infantilized electorate cannot accept reality . Paul Ryan was crushed for just bringing up the subject of medicare cuts to sustain the system and our courageous president led the charge.
INFLATION-ADJUSTED DOLLARS (2010)
The federal government is spending more per household than ever before. Since 1965, spending per household has grown by nearly 162 percent, from $11,431 in 1965 to $29,401 in 2010. From 2010 to 2021, it is projected to rise to $35,773, a 22 percent increase.
data available as of March 2011 from the Office of Management and Budget (OMB) and the Congressional Budget Office (CBO). The charts using OMB data display the historical growth of the federal government to 2010 while the charts using CBO data display both historical and projected growth from as early as 1940 to 2084. Projections based on OMB data are taken from the White House Fiscal Year 2012 budget.
PotomacOracle wrote "I think the most efficient tax we have is the real estate tax. " It is readily enforceable at low cost, and the infrastructure is already in place at the local level."
When I read something like this, aside from wrenching pain, dizziness and nausea, my first instinct is to go for the jugular of the person who would put forward something as disgusting as this is as a serious idea.
Property tax is the most insidious tax there is. Much of our working life is used up making payments to buy a house to live in without mortgage payments and to establish some security. But no, if you find yourself without income to pay for utilities at least you have a roof over your head, yea right. Property taxes must be paid or you will be thrown in the street. Armed government officials will remove you if you do not comply. We own nothing, we pay rent to the government to live in our houses, don't pay the rent! EVICTION. Tax the rich schemes like this could never work anyway because the "rich" just will not buy highly taxed property. Commercial real estate taxes would just be passed on to the consumer.
The last thing we need is to make it easier for government to steal our money, homeowners are already slaves to public school labor unions.
Tax freedom day this year is April 12, In other words, most Americans will work for more than a quarter of this year, to earn enough money to pay all of their taxes for the year.
The GOP argument that taxing "job creators" will reduce hiring makes no sense whatsoever. Here's why.
Let's assume a business owner facing a tax increase can hire a new employee at an "all in" annual cost of $50,000, and let's also assume that employee will generate an additional $75,000 in annual revenue for the business. That would give the owner an extra $25,000 in profit each year. Why would any rational business owner turn down the additional income? (If your taxes were going up, would you turn down a $25,000 pay raise?)
If owners would refuse to hire employees who would generate more income for their businesses because tax rates are rising, then the reverse also would be true. That is, lower a business owner's tax rate and he/she would be willing to hire an employee who would reduce profits. Show me an owner who who hires employees that lose money for the business, and I'll show you a business that won't be around for long.
Six years ago I was unemployed and living off the charity of friends. I saw little point in humiliating myself to apply for the meager pittance I could have received through SNAP in NC. For the last six years my wife and I have made enough to employ a capable tax accountant (her fee deductable) to avoid paying any federal income taxes. We do pay FDIC and some NJ income and property taxes, and the federal avoidance requires charitable giving and careful planning. I do not object to a progressive federal income tax if it were steeply graduated by income and strictly enforced without exemptions. (Because of corruption this has never happened.) My innovative suggestion is that taxpayers be able to designate the use of their levy just as they do with most local area funds and United Way. Those who value "Defense" (warmaking) could surrender a chunk of their paychecks to weapons contractors and armed fighters, Pentagon chair jockeys and Brown&Root chefs. Those who want to fight poverty could designate for SNAP, Medicaid and education grants. Some might feel generosity toward Solyndra or Chrysler, and others want to build roads, canals or high speed rail. You could underwrite research to cure the disease of your choice or put a woman (maybe Oprah or Lady Gaga) on Mars. My point is that this method would limit the powers of our do-nothing Congress which now beckons to Oligarchs and would provide the most thorough economic democracy ever. People would quickly learn to get involved and govern themselves. That would be both my Christmas wish and my New Year's Resolution.
40% of federal government spending is borrowed. How much more would the rich have to pay in taxes to cover the borrowed 40 cents of every dollar spent by the federal government.
By the way If taxes were raised on everyone the tax holiday would move up to May 22 if taxes were raised to cover federal government deficit spending. Were getting close to half a year for private sector workers to work enough to support our government. How could any sane person say spending is not the problem.
Republicans cannot produce these so called millionaire job creators
http://www.npr.org/blogs/itsallpolitics/2011/12/09/143398685/gop-objects...
just like everything else the GOP serves up, it is most likely a lie in order to destroy the middle class and protect the 1%
If millionaires and billionaires had been creating jobs. Jobs numbers would have gone up by leaps and bounds during the Bush administration. They did not.
Questions:
How many of our Reps are millionaires or billionaires? These are many of the same individuals who voted to reduce capital gains taxes from 28% to 20% under Clinton and from 20% to 15%
What do they pay in capital gains taxes?
Also just recently heard a figure on MSNBC that 6 Walton (Wal Mart) family members make what the bottom 30% of employed Americans make> Could your guest address this.
Want to save money stop waging wars cut the military by 66% and put those ex soldiers to work on bringing new infrastructure to America
What evidence is there that taxes cuts for millionaires lead to the creation of new jobs? Are we supposed to accept this on faith? Or is this a scientifically proven fact?
When times are good, Republicans want to lower taxes and cut regulations.
When times are bad, Republicans want to lower taxes and cut regulations.
When the economy tanks thanks to a loss of tax revenue and lack of regulations, Republicans want to lower taxes and cut regulations.
Einstein once said, the definition of insanity is doing the same thing over and over, and expecting a different result.
Glad Diane is back and her husband is better!
Have been spending a great deal of time with 80 and 90 something union workers in the several different nursing homes my WWII teamster father has been spending time in. Talking with long time retired GM, Delphi, Postal, factory workers. Many of them have strong and clear opinions about what has happenned to the US economy over the years. Almost all believe that manufacturers, corporations "sold the American worker down the pike decades ago" by first moving into states where they could pay cheaper wages etc etc. Then moving to Mexico and overseas. That the situation the US finds itself in now is a catastrophic and accumulative effect of the persistent and successful effort for the top 1% to make more and more and more and their willingness to sell again "the American workers down the pike"
When 6 Walton family members make what the bottom 30% of employed Americans make. When Wal Mart workers are not able to organize unions. When the largest employer in the world gives minimum insurance coverage. How in the hell can anything change?
seems to me that there is and has been a definite case of wealth redistribution going on in this country. However, despite the rhetoric of the libertarians it has been upwards. Now that the country is in trouble, and we need that money stored in their bank accounts they are crying "Class warfare" and socialist wealth re-distribution. Then there is the OWS people who have no clear message, and are trying so hard not to look political that I, for one, cannot take them seriously.
This country is broken and busted. We have no one to blame but ourselves, not the Government, ourselves. We keep putting people in office that have one agenda, stay employed. I am not advocating term limits, we already have that, it's called voting them out. What we need it an informed active electorate. This Government is the government we have allowed to happen by not paying attention and electing people who have the flashiest ads and more money to use them. The parties haven't had a novel idea in 50 years and we have squandered 50 years and trillions of dollars accomplishing nothing.
I would say vote them all out but who wants to go through the interview process for that job? Any small indiscretion, and who doesn't have a few of those in their past, is grounds for dismissal from the process. Who's left after this weeding out? The really accomplished liars. This is what we get and this is what we have.
Kerkula. There is no data to back up those endlessly repeated false claims. MSNBC has been calling this falsehood for months if not several years
When George Steinbrenner died last year, no estate taxes were collected. This saved the estate over $500,000,000 (half billion) dollars. I'm sure the Steinbrenner kids could easily pull themselves up by the bookstraps on the remaining billion plus that remained. When the extremely wealthy don't contribute to the same extent that they benefit, the remaining bill simply grows, or we radically change the compact that has been in place for generations. His death alone results in over $1.50 from every single living American just to make up the failure to collect from his estate. Our founders didn't want an aristocracy. We are now growing an aristrocracy and oligarch society.
The Right has been using it for years to underscore a particular vision of capitalism in which those who have benefitted most by the system are also most essential to its continued success. The problem is in the definition itself, "job creators" may or may not actually create any jobs. It becomes hard to figure out what distinguishes the "job creators," as a group, from everyone else — at least beyond their relative wealth. Most Americans spend, save, and invest in varying degrees…. it is just that we do it with a lot less money. Shouldn’t they be allowed the term of “job creators” as well? The term "jobs creators" is actually a rightwing theory of capitalism in which those at the very top of the economic pyramid end up supporting the base. In Adam Smith’s philosophy the enduring success of capitalism is an increasingly complex system of work and exchange that requires "the assistance and co-operation of many thousands." There is no room for a single group that can be meaningfully called the "job creators." They are no different and should not be held in any higher esteem than the men on the factory line. One of the scare tactics that the right likes to haul out when debating this issue is that small businesses represent “job creators”. They claim that higher taxation will destroy small business. In truth, in the United States right now there are about six million firms with paid employment. Ninety percent of those firms are termed “small businesses”, which means they have 20 or fewer employees. That ninety percent only make up 20 percent of “all jobs”. So while there are a lot of businesses, there are not a lot of “jobs” in small business.
The guest just stated that many people have more than a million dollars in assets. That such a vast level of wealth was common. Nothing could betray how out of sync the Washington establishment is with the US population than an idiotic comment like that.
It would seem to me that a marginal tax increase would actually create an incentive to hire someone, as that would decrease taxable income.
There is no tax policy which will cause a business in our economy to add an employee the business does not need, short of a direct payment of the added employee salary by the government. The definition of success in private enterprise is profit, not employment. Profit is the difference of income minus costs and employment is a cost. Modern business has become very good at minimizing costs. Labor costs are some of the highest and easiest to eliminate costs in any business in the US.
The claim that successful business people and high income earners are "job creators" is a myth. Success in business is more about job destruction than creation. Any business that comes into extra capital from something like a tax cut is more likely to use the money to reduce labor costs than for any other purpose.
I had a job as an engineer a couple of years ago in which I personally reduced the cost of production of the companies products by $1.5 million by redesign of the products and methods of production. Virtually all of this cost reduction was labor costs either direct of of suppliers. A little arithmetic will tell you that this represents 40 jobs eliminated in one year by one engineer (actually 41, as I was laid off at the end of the year as a reward for my success). This is just one example of how business uses its available capital.
The idea that small business creates most new jobs is based on the experience of the the past few generations during which our economy has been dominated by a series of bubbles that were primarily fiction. These jobs were not real or sustainable and never were.
Tim in Texas.
As a former small business owner (10+ years), I'm angry with the GOP argument that taxes (especially a modest tax increase) hinder the creation of jobs. My overwhelming experience was that customers (or lack thereof) are the primary factor behind hiring new employees. There were any number of other factors that rank higher than taxes.
The term "job killing taxes" is a handy but totally false and misleading expression that, in my view, is solely for political gain.
The Right Wing keeps pushing the idea that the 1% are the job makers... How can they justify this when unemployment is still so high? Where are the jobs that they claim they are making?
Thanks Diane, love your show!
If it were true that the lower taxes would cause the "job creators" to create jobs, then WHERE ARE THOSE JOBS??? The lower taxes have been in effect, while the jobs are not there! It's very frustrating to continuously here this "job creators" phrase be paraded in the public discourse.
In the real world, a higher tax rate stimulates hiring, because it lowers the after tax cost of an employee. As an example, if I hire a $50K per year accountant today at 33% marginal tax rate, the after tax cost is $33,500. If the tax rate was 39%, the after tax cost is $30,500. Higher taxes motivate small business to report less income. One way to lower your income is to invest in people, equipment, new product development, etc. As usual, politicians and pundits don't really understand microeconomics.
Glenn Greenwald (interview with Harry Kreisler @ Salon) believes we have renounced the rule of law and the ideal of equality before the law for a system that cloaks and protects the wealthiest and most powerful. Pundits (and paid reactionary bloggers) are working to rationalize this radical outrage and quiesse our panicked and puzzled populace. The obviously untrue claim of wealthy "jab craters" actually states that they possess by their wealth and power the possibility of employing more underlings but that it is not to their advantage to do so at this time. An abstraction is substituted for a practicality and authoritarian minds make a suicidal leap of reason. Media and educational policy is to foster worship, admiration and deferrance to concentrated wealth and power to the exclusion of equality before the law. The "quiet Coup" in finance was made possible by such an attitude according to Simon Johnson and Joseph Stiglitz. So now we must depose Oligarchs to regain the rule of law. Jobs are not yet in the forecast and will not be util we do. Financialization has heated up economics and caused an economic climate shift.
If millionaires were the economic thoroughbreds the GOP claims they are, then you certainly wouldn't coddle them, you would need them hungry for the race and not fat and sated.
Clearly, The GOP shouldn't be allowed to run a lemonade stand.
One of the things the republicans suggest is out of balance in America is that we have such a high corp tax. Has anyone looked at what American coprs. actually pay in taxes compared to those in lower taxed countries?
I fit the category you are discussing and have many friends within it. I will be happy to discuss. Sub Chapter S or taxes. I am not in a huge city. 205. 913.7905 Bew White
S-corporations are taxed like partnerships and proprietorships, giving them an advantage over big corporations. After corporations pay their 35 percent income tax, owners, shareholders, pay another 15 percent tax on the dividends. Combined, the taxes on distributed corporate income are 43 percent. Would elimination of this double taxation stimulate job creation?
Second question: why don't we limit millionaires to the standard deduction?
Mike H20:
"A comprehensive study found that 280 of the biggest publicly traded American companies faced federal income tax bills equal to 18.5 percent of their profits during the last three years — little more than half the official corporate rate of 35 percent and lower than their competitors in many industrialized countries."
Source:
http://www.nytimes.com/2011/11/03/business/280-big-public-firms-paid-lit...