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

http://www.businessweek.com/news/2011-12-07/raise-taxes-on-rich-to-reward-true-job-creators-nick-hanauer.html

by cawel • 14 years ago

27 17 14 years ago

I completely agree with this. I have been saying it for years and it gets people very angry. This is definitely a view that a minority of people that I talk to believe. Even most working class people think that the super rich drive the economy it just isn't true anymore. I think it may have been when the country was in it's early stages and mining our resources and developing infrastructure was a larger portion of our economy. I believe now that our economy is driven by the masses of consumers. Give the poor a billion dollars and a billion dollars gets put back into the economy that year. Give the rich a billion dollars and and a billion dollars goes into a mutual fund. The later has far less of an economic impact.

wballard• 14 years ago

Guys, rich people don't keep a Scroogey-McDuck pile, large concentrations of funds make venture possible, as it lowers the marginal risk. Try having our current startup fueled cycle without concentrated wealth.

Can we really drive the human experience and technology higher by diluting our funds in an effort to normalize and support, as taxation would do creating obs the average can fill -- or should we concentrate and invest in those with the most potential?

bithive1232• 14 years ago

We can do both; rhetoric in this country has gotten to the point where simply letting tax cuts for the wealthy expire is spun as "class warfare".

chrismealy• 14 years ago

It's all true, but it's sad that people only listen if a rich person is talking.

mdda• 14 years ago

Maybe because if a non-rich person says it, it could be self-serving. Having a billionaire make the same self-sacrificing claim lends it credibility.

webjprgm• 14 years ago

Exactly. Which is why I'm actually thinking about this article instead of ignoring it out of hand like I do for any article that makes a fuss about changing the tax system.

The other part (respecting who says what) is partisan politics. Republicans are set on their anti-tax stance while Democrats are set in other stances that I cannot agree with. When you are stuck voting R vs D and not issue by issue, what do you choose? Then choosing one side, I tend to believe more of what that side says rather than carefully considering issue by issue. (A mental practice which I am trying to change.) This is also kinda why I prefer power to flip-flop between R and D vs. always be one side.

cawel• 14 years ago

My favorite paragraph is this:

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.

That's an excellent counter-example of trickle-down economics.

JumpCrisscross2• 14 years ago

Actually, that it is more an example of tribalism and xenophobia. Why is a manufacturer inherently evil for a crime no greater than not being American?

msellout2• 14 years ago

He was not indicating evilness. He was pointing out that the money flows out of the United States. The article is directed at people who are trying to create more US jobs and increase US GDP.

makhanko• 14 years ago

Great article. Being an Economics major in my previous life I always suspected that Supply-side economics was kind of bullshit. This just nails it - "When businesspeople take credit for creating jobs, it is like squirrels taking credit for creating evolution. In fact, it’s the other way around."

bmelton2• 14 years ago

Taking the opposite stance:

"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."

Nor does your family impose 3,000 times the burden on the economy either (which might necessitate a greater income tax), or drive 3,000 times the average (which might necessitate a greater road tax) or what have you.

Needless to say, I disagree with the premise of progressive taxation, but it is of course a complicated subject, so I'm always willing to hear more on the matter.

bithive1232• 14 years ago

Care to elaborate on why you "disagree with the premise of progressive taxation"? The only arguments I've encountered to date are morality-based and stem from a world view that says all taxes are immoral.

Leaving the issues of government waste and the morality of taxation aside, I don't see how anyone can dispute the fact that an extra $10,000 (pick any number) per year means a lot less to someone making $500,000 than it does to someone making $40,000. If there are going to be taxes, it seems almost obvious (I dislike that word but am using it here) that they should be progressive.

bmelton2• 14 years ago

A person making $500,000 a year paying 10% of his income to taxes would pay $50,000 in taxes. A person earning $40,000 a year paying 10% of his income in taxes would pay $4,000 in taxes. This isn't progressive taxation, it is linear, as both parties pay the same amount in taxes. I _do_ disagree with the premise of taxes on the whole, but I am comfortable paying 'an equal share'.

Progressive taxation, which I abhorrently disagree with, is when you penalize the higher income for having earned more. Are they better able to burden the load? Perhaps, but now we're punishing success, and removing the incentives for the lower income families to strive for more, both because they're less likely to reap their rewards (due to the progressive taxation) and because the needs of the poor are better met by the taxes of those richer than them.

What this also gets does is foster more of the environment that we have, where federal waste becomes more eggregious and tax dollars are diverted even more to the benefit of those paying the lion's share, leaving the lower class even worse off, which generally leads to their crying for even more progressive taxation.

Again, this is just my understanding of how things will work. Your opinion may vary.

JumpCrisscross2• 14 years ago

The implied premise of this article is that government should encourage consumption and discourage saving/investment. Yes, this produces growth, but it also levers up the economy. The article also presumes a closed system, i.e. no imports or exports.

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.

The assumption here is that the marginal public sector investment yields more than the marginal private sector investment. This has not been shown to be the case empirically (there's a solid return up to a point beyond which one is staffing NASA with bureaucrats and building un-inhabited cities in rural China).

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.

Yes, but we conveniently fail to declare what "reasonable" means. Taxing the top 10% of earners (around 150k) at 60% would close the gap, but it would also have many unintended consequences. You can't close the hole from raising taxes on a limited slice of the voting population alone.

carsongross• 14 years ago

The problem I have with this article, and any discussion that simply involves "the rich" is that it doesn't distinguish between the true innovators (to be trite, the Steve Jobs' of the world) and the (much larger) financializers, who truly do not generate any wealth, but rather suck productive and innovative capacity dry.

Steve Jobs gave us plenty even if he had never paid a dime in taxes.

Hank Paulson ate arbitrage for decades, then bailed out the banks after exactly the policies he advocated for collapsed on themselves, and should be in jail.

If you don't distinguish between these two types of rich, you are being stupid.

functionoid• 14 years ago

Do rich people use more road, parks or any public facilities more than the average person? In fact they use less. Is they any other reason than a rich person makes more money so should pay more taxes. In that context rich should also pay more at restaurants and for all other things that will also help the economy.

They worked hard to create the wealth and jobs in the ventures they created. Any one disagreeing that entrepreneurs means wealthy for this article do not create jobs, I have a question for them, does government create jobs?

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

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