“Job Creators” –That Lying, Orwellian Phrase Fox New Loves

From “In Talks, G.O.P. May Have To Just Say Yes,” Robert H. Frank, NYT:

“That realization appears to have led some Republicans to resurrect their time-honored claim that because many top earners own small businesses, higher top tax rates would severely compromise job creation.  But that argument flies in the face of the basic cost-benefit test that governs rational hiring decisions.  As every economics textbook on the subject makes clear, a business will hire additional workers whenever, and only whenever, their contribution to the bottom line promises to exceed their pay.  If that criterion is satisfied, hiring makes economic sense, no matter how poor the business owner might be.  And if it isn’t, no hiring will occur, even if the owner is a billionaire.”

Since it doesn’t sound good to oppose raising taxes even slightly on the rich, Fox News doesn’t call them “the rich,” they call them “job creators.”

But this economically false notion prevents us from having an honest debate about what’s fair for the top two percent of earners to pay.

 

Mitt Wants You to Pay More, So Rich Can Pay Less

The Brookings Institution and the Tax Policy Center have issued a report on Mitt’s tax plan.

The plan raises taxes on 95% of us by an average of $500.

But if you make $200,000 or more, then you’ll pay less, a lot less.  In fact, the plan would shift about $86 billion in tax burden from those earning over $200,000 to us “little people.”

Why is it evil “redistribution” when it goes from the rich to the rest of us, but economic genius when it goes from the rest of us to the rich, excuse me, the “job creators.”  I guess because Frank Luntz says so.

 

 

 

If You Believe It, You Deserve It

Mitt campaigned in Colorado today (good luck with that, since the marijuana ballot initiative will bring out young voters) and slammed President Obama’s plan to extend the Bush tax cuts only for those making less than $250,000:  “For job creators and small businesses, he announced a massive tax increase.”

That’s not true, and it drives me crazy to hear it, but I’ve decided that if voters are dumb enough to believe it and Mitt wins, they will get what they deserve.

First of all, most small business owners don’t earn over $250,000.  In fact, Obama’s plan would not affect 97% of small businesses.

Second, Frank Luntz recognized that arguing against raising taxes on the rich to help with the deficit was a tough, losing slog and suggested that instead of calling them the rich, the GOP should call them “job creators.”   He deserves an enormous bonus from the Koch Brothers.  That’s evil genius at its best.  I tip my hat in admiration and frustration at Luntz’s gift for the Orwellian.

But the rich are not job creators.  Some of them are employers, but employers don’t create jobs, consumers do.  If you have a little ice cream shop, and you can handle the traffic yourself, you don’t hire anyone else.  Your tax rate has nothing to do with it, you’re just going on how much demand there is for your product.  If demand increases when school lets out, you may hire a high school kid part-time to help out.  If the line is out the door all day long and people are walking away rather than waiting, you’ll hire more people so you don’t lose those customers.  But it’s people wanting ice cream cones and hot fudge sundaes that dictates your hiring, not the IRS.

That’s why our periods of highest growth and greatest prosperity since WWII have come when marginal tax rates on the rich were much higher than they are now.  Consumers had money in their pockets to buy ice cream cones — and cars and carpet and clothing.

If the Obama campaign can’t get this very basic economics across to people, and the GOP gets away with their “job creators” BS, Obama deserves to lose.

Refuting the Big Lie Against the Buffet Rule

Mitt and the GOP argue against President Obama’s Buffet Rule or any other tax increases for very rich people by claiming that if you tax the “job creators,” you both reduce revenue and destroy growth so that everybody suffers.  This is complete and utter garbage, this is their “big lie,” but they have to figure out how to convince more people to vote against their economic interests than just the abortion/gay marriage/guns crowd.  They need to con some people from the middle or they lose.

So that’s why I was thrilled to see an op-ed, in the Wall Street Journal no less, “High Tax Rates Won’t Slow Growth,” by Peter Diamond and Emmanuel Saez, that calls out the big lie.  Diamond won the Nobel Prize for economics and is an MIT professor emeritus.  Saez is an economics professor at U. C. Berkeley and winner of the very prestigious John Bates Clark medal.  From the op-ed:

“The share of pre-tax income accruing to the top 1% of earners in the U. S. has more than doubled to about 20% in 2010 from less than 10% in the 1970s.  At the same time, the average federal income tax rate on top earners has declined significantly.  Given the large current and projected deficits, should the top 1% be taxed more?  Because U. S. income concentration is now so high, the potential tax revenue at stake is large.

“But will taxable income of the top 1% respond to a tax increase by declining so much that revenue rises very little or even drops?

“According to our analysis of current tax rates and their elasticity, the revenue-maximizing top federal marginal income tax rate would be in or near the range of 50% to 70%….  Thus we conclude that raising the top tax rate is very likely to result in revenue increases at least until we reach the 50% rate that held during the first Reagan administration, and possibly until the 70% rate of the 1970s.

“But will raising top tax rates significantly lower economic growth?  In the postwar U. S., higher top tax rates tend to go with higher economic growth — not lower.  Indeed, according to the U. S. Department of Commerce’s Bureau of Economic analysis, GDP annual growth per capita (to adjust for population growth) averaged 1.68% between 1980 and 2010 when top tax rates were relatively low, while growth averaged 2.23% between 1950 and 1980 when top tax rates were at or above 70%.

“By itself, a suitable increase in the taxation of top earners will not solve our unsustainable long-term fiscal trajectory.  But that is no reason not to use this tool to contribute to addressing this problem.”

I wish every voter would read this op-ed.  Mitt and the GOP aren’t just wrong about taxing the rich, they know they are lying about it.  We need to send them a message in November that “Populus vult decepi” may have been true in ancient Rome, but it isn’t true here, and it isn’t true now.