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

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.

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. (MSFT) in 2007 for $6.4 billion. I was also the first non-family investor in Amazon.com Inc. (AMZN)

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.

This is a very interesting article that points out the real source of the financial catastrophe that America has become. He states the obvious - the rich can't create jobs and businesses when the average American has no money to spend on their products, and tax policies that only benefit the rich don't do diddly squat to boost job creation.

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.

Read the complete article at Bloomberg.com

I only know about business and economics superficially but this made more damn sense than a lot of squawk I've heard about the economy in recent years.

Never looked at it that way, very insightful.

Thank you!

Taxes are legitimized extortion. Let's get that out of the way first. However, since we live under the oppression of taxation, our government needs to close loopholes and make "the rich" pay their taxes first. Then we can see if we even need to raise the tax rate. If we raise it and don't close the holes, the amount received, like from GM, will still be zero.

Interesting article, though. Thanks for sharing!

/TOA

We are consumer societies and if no one has any money or the confidence to consume products, then our economies will only go further down the pan.

In the UK, the government are trying to make it easier for banks to lend to business's and cutting corporation tax to encourage business. The problem is the majority of people are seeing a decrease in the amount of disposable income. The money needs to get to the consumer rather than for easing credit in Banks.

would the more money the consumer has result in a higher inflation rate? the more the consumer can buy the more companies increase prices. its all good and all that the consumer has more money but what will be the effects?

not saying everyone should be pennyless just a balance is needed, which is what people have been trying for a very long time.

Originally posted by woodwardjnr
The problem is the majority of people are seeing a decrease in the amount of disposable income. The money needs to get to the consumer rather than for easing credit in Banks.

Indeed. All of the bank bailouts were supposedly justified to restart lending to consumers, but three years later we are still in a credit crunch because consumers can't afford to add any more debt. Banks have made record profits by borrowing at zero percent and ramping up interest charged on loans to near 30%. Great for them but another nail in the coffin for the consumer.