SPECIAL COMMENTARY: A BIG FAT LIE: TAX BREAKS FOR THE RICH DO NOT CREATE JOBS

Rochester, N.Y.-- You hear it all the time coming from the right, variation after variation on a core belief: if you tax rich people-- it kills jobs. You hear about "job-killing tax hikes," or that "taxing the rich hurts jobs."

It is standard Republican talking points that date back to the Ronald Reagan days. So, the bigger question is do we really depend on the rich to create jobs for America? Or, do jobs emerge when we create demand and pass laws to balance the marketplace and regulate accordingly?

This is not exactly an ideological or a philosophical rhetorical argument. This belief is either fact or fiction. It can be proven or disproved by numbers, measuring and science, and that's exactly what objective observers should be doing instead of taking the word of right wing "think tanks" and empty-headed pundits.

For starters, here is a recent typical example of a conservative article titled, "Obama Touts Job-Killing Tax Plan," written by a senior fellow at the Cato Institute and chairman of the Institute for Global Economic Growth.

In part, the article said:

"Some people, in their pursuit of profit, benefit their fellow humans by creating new or better goods and services, and then by employing others. We call such people entrepreneurs and productive workers. Others are parasites who suck the blood and energy away from the productive. Such people are most often found in government. Perhaps the most vivid description of what happens to a society where the parasites become so numerous and powerful that they destroy their productive hosts is Ayn Rand’s classic novel “Atlas Shrugged.”

The very idea of producers and parasites

The idea that there are producers and parasites as expressed in the example above has become a core philosophy of today's conservatives. They exclaim that wealthy people produce and are rich because they are the talented ones and can produce. The rest of us are parasites who suck the blood and energy from the productive rich, by taxing them.

A typical divisive Conservative
Party bumper sticker in America. 

In this belief system, working Americans are basically just "the help" who are otherwise a burden on those with the most wealth-- we tax the producers to pay for our "entitlements." We take money from the producers through taxes, which are redistributed to the parasites. They repeat the slogan, "Taxes are theft," and take the "money we earned" by "force." This is just nonsense, but nonetheless the way they see the world.

The most visible culprit spouting this mentality is Republican Speaker of the House John Boehner. He echoed this core philosophy of producers and parasites, recently stating:

"I believe raising taxes on the very people that we expect to reinvest in our economy and to hire people is the wrong idea,” he said. “For those people to give that money to the government…means it won't get reinvested in our economy at a time when we’re trying to create jobs.”

So is it true? Are the the wealthy responsible for job creation? We at the Voice Reporter believe that the conservative producer and parasite anti-tax philosophy is fundamentally flawed and at odds with the concepts of a functional democracy. To take that leap of faith and say the rich are the ones who create jobs would be disingenuous. The working class is just as responsible as anyone for building a stronger economy.

photo:  Ove Overmyer

Moreover, working people are the ones who create jobs and generate America's wealth. Most sane economists agree that the top 2 percent of the richest Americans do not spend their money by creating jobs. It means we are only creating windfall bonuses by not holding them to the same tax standard as the rest of America's citizens.

Giving unnecessary tax give-aways to the rich also causes an erosion of vital public services-- this has become the devil in the details when local governments try to balance local budgets. By not adequately having a fair and equitable tax system, we deny all our residents, rich and poor, the necessary services they have come to rely upon.

Democracy and demand creates jobs, not the wealthy

The idea that wealthy people and corporations create more jobs when paying less in taxes is a claim that has superficial appeal, premised on the idea that, because businesses employ workers, they would employ more workers if they had more money. However, this simple calculus fails to acknowledge that employment is driven by consumer demand, not the amount of money in an executive's pocket or on a business' balance sheet. A business or entrepreneur will not use profits to add more workers unless there is consumer or business demand for their product or service.

Regardless of your income, all Americans are supposed to contribute to our national productivity, expect equal opportunity and should demand equal rights at our workplaces. And there are social benefits we are all entitled to-- like health care, a living wage and Social Security when we get older. These are inalienable rights, not programs for the privileged few who can afford them. Moreover, we should all proportionally share in the responsibility to cover the costs of our democracy. That is obviously not happening in 2011.

Taxes are the lifeblood of our democracy

According to Citizens for Tax Justice, overall taxes in the U.S. are the third lowest among industrialized countries (only Turkey and Mexico are lower). Corporate taxes are also lower than in most other industrial nations.

Additionally, there are huge inequities in our tax codes-- and they favor the rich. People at the bottom of the income ladder, the lowest 20 percent, pay almost twice as much of their income in state and local taxes as the top 1 percent. The poor pay 11 percent, the rich just 6 percent.

A functioning democracy should be designed to have a progressive tax structure that is in proportion to the means and ability to pay for the vital services we demand and can not do by ourselves as individuals.


photo:  Ove Overmyer

Conservatives and Republicans cast American tax-payers as victims. They moan that we are just taxpayers bearing up under the obligation to pay into federal and state coffers. Some are stoic in the face of the inevitability of “death and taxes,” while others burn with resentment like the Tea Party folks. We dread the task of hauling out that folder of receipts and calculating just how much of our income we have to hand over to Uncle Sam.

All of these GOP stories reflect a complete miscalculation to the reality of our tax paradigm. What is missing from this picture is any sense of a larger meaning in the act of paying taxes. Most other things that require effort and sacrifice-- family, service, charity, and volunteerism-- have virtuous, or at least redeeming, meaning associated with them. That meaning helps us face life’s challenges with a sense of a larger purpose that makes these acts worth the investment.

The GOP stories they tell about paying taxes reflect a chronic disconnection from our role as citizens; they are devoid of any civic meaning. The real meaning of taxes pay for the things that underpin our public life and connect us to one another through our communities, our states, our country and our collective future.

When we lose sight of this, taxes are seen as merely depriving us of our individual property. If, on the other hand, we see ourselves as stewards of a common good, as citizen managers of public systems and structures that secure the city, state and country we live in, then taxes are our contribution to something much more important than our individual being.

We all need to be telling a new and meaningful story about our tax responsibilities that celebrates the concrete opportunity it offers “we the people.” The problem is, without the public systems and structures that taxes pay for, the America we know and love would cease to exist.

The final analysis:  no correlation between job creation and tax breaks for the wealthy

Looking at raw statistics, it is easy to see that there is no correlation between reducing personal income tax rates for the wealthy and employment levels. The marginal tax rate for the wealthiest members of society hovered above 90 percent for the twenty years between 1944 and 1963, with unemployment during this period as low as 1.2 percent and a high of 6.8 percent. From 1965 to 1981, taxes for the upper income bracket were lowered to 70 percent, with unemployment as low as 3.6 percent and as high as 7.7 percent; from 1982 to 1986, the wealthy were taxed at 50 percent, with unemployment only reaching a low of 7 percent and a high of 9.7 percent. Taxes continued dropping through the 1980s and 1990s, with the top tax rate dropping to 31 percent in 1992, but with very little positive impact on job growth.

In 1993, unemployment was at 6.9 percent, the tax rate for the wealthiest increased to 39.6 percent, and unemployment actually decreased to 4 percent by 2000. From 2003 through today, thanks to the Bush tax cuts, the rich have been taxed at 35 percent, and unemployment is now approaching 10 percent.

Jobs are created by supply and demand. When there is a demand for something and a middle-class that has the resources to pay for it-- jobs are created. Rich people and multi-national corporations only create new jobs when the demand for their goods or services increases. Supply and demand has nothing to do with how much taxes businesses and CEO's pay or don't pay-- neither does it change their ability to employ more people.

The fact is that Wall Street is humming right now, CEO pay is through the roof and Fortune 500 companies are seeing record growth. Meanwhile, at the same time, America has the largest income inequality since 1928; we are gutting vital public services like libraries and education; our bridges, roads, dams and infrastructure are crumbling right before our very eyes; local governments are defunding necessary life-saving services for the most vulnerable in our communities.

Our poverty rates in suburban, rural and urban areas continue to rise and the level of human suffering has become unspeakable. Our GOP lawmakers are making it easy for multi-national corporations to take the wealth that the American working-class generates and invest those tax dollars in emerging middle-class markets in Brazil, India and China-- not in your backyard. Is this the America we all know and love?

So, the next time you hear this argument being perpetrated by anyone, from any walk of life, feel free to interject some truth in our public discourse.

Simply put, the American people are hungry for our leaders to restore a vision for a national future founded on the premise that social justice and material prosperity are not competing values-- that they can co-exist and are necessary to each other for a healthy, sustainable and growing economy. The sooner we recognize that, the better.

Commentary by Ove Overmyer
These opinions reflect the belief of the author only and do not represent CSEA, INC as an organization.