Taxing the Rich = Higher Unemployment

Merc

Certified Shitlord
V.I.P.
#1
One line of logic I've never been able to follow is this idea that if we tax the rich more, such as big companies, that it will generate a stronger economy or at least help rebuild it. Has anyone who thinks this ever worked a day in their lives? It's clear what happens when big businesses are crunched, they downsize. They obviously want to keep their business the way it is, so they trim weight. They cut lower people or pile on responsibilities to compensate.

Maybe my views are just naive but I've seen this at work in my previous company. People these days get some sort of primal satisfaction when they're told or promised by politicians that they're going to tax the wealthy or beat on big business and then POOF! Unemployment is at 10%.

What do you think?
 

CaptainObvious

Son of Liberty
V.I.P.
#2
I've been seeing this more and more everyday. In fact, I just read an article that said only about 20% of corporations are still matching the employee's 401(k) contribution dollar for dollar. Businesses downsizing and finding ways to do things cheaper and cheaper has been the reaction every time we've increased taxes, yet we do it again and again. Mostly because while it doesn't make sense economically, it makes sense politically. It feeds into the class warfare. The politician couldn't care less about the economic ramifications, he got enough votes to win the election.
 

icegoat63

Son of Liberty
V.I.P.
#3
After spending 5 years taking courses in Business Administration, Marketing, and Accounting... Taxing Business owners or in other words; Employers, is an incredibly bad move. You're literally slapping the hand that feeds you because the fingers think its funny.

So they have more money than a kid out of high school who's making minimum wage. So they make more money than a double income suburb home, who cares, live your own damn life and enjoy what you have. That jealousy driven Primal Enjoyment of Taxing the rich really only hurts everyone as a whole. Because lets not forget... its the Rich that even though they have drastically less numbers than the Middle and Lower classes, its them that go golfing with your Senators every Saturday.

If I were a successful politician, creating jobs to me is best encouraged by giving some breathing room to Bigger Companies. Nobody grows by tightening their belt, you have to stretch in order to grow or even maintain what you've grown to already. Tightening Companies overheads with further taxes is and will always be a recipe for disaster. Let the Rich get Richer...because when that happens, prices drop and innovation occurs. The only thing that comes from punishing the Business owners for their success is unemployment and depression. Sure the Government gets a nice big influx of cash thanks to the short term taxes they're given. But congrats....now that you've tightened the belt on that company, 1500 people got laid off and now they're losing their homes so they arent paying property tax, or renters tax or any of those other things. They dont have the money to pay for gas to go to town so all the other taxes involved with Spending are dissipated. And it doesnt stop there, the original Taxed Rich Business Owner will no longer be spending his/her money on frivolous things either. That money is going to be held on to tight now in fear of further taxing.

Its more than obvious that the Uber-Wealthy do not outnumber the Middle Class by any means. So what I cant understand is why the politicians dont seem to understand that if the powers are in the numbers then the dollars are also in the numbers. I would be curious to see a graph or something to represent how many middle/lower class workers it would take to be equivelant to One Rich Business Owner. Then take that number, and compare it to the Huge Lay-offs that have occurred already.

And to finish, I'm glad that the media is finally recognizing that Obama's D.O.T. spending is not fixing Unemployment just as the whole Construction world said. If he or his advisors had listned to ANY of the Construction world... they'd have realized it wouldnt in the first place and the money could have been put to better use on projects that would have actually had a snow balls chance in hell to create jobs. Congrats Obama, maybe next time you can put those big ears to use.
 

Sim

Registered Member
#4
I think all of you have good points, but they are only one side of the medal. The other side is what happens with that money that is taxed from the "rich". First, it makes a difference whether you tax companies and/or transactions, or big personal incomes. The latter will not necessarily be invested, if it isn't taxed away.

Also, it depends on how this tax money is then spent: If the government uses it to finance projects (not necessarily a waste of recources; the armament industry is based on it, so is public transportation, flying to space and moon, etc), it then creates new jobs, potentially even more jobs that it destroys by taking it from the companies.

Also, it can be distrubuted downwards, to lower income people, by social subsidies or tax cuts for the less wealthy. In that case, much more of it is spent by those recipients on consumption, than would have been spent by the rich, resulting in an increase of demand on the market, which may stimulate economy -- especially in a a global economic situation when more demand is needed and companies are suffering more by a lack of demand, than by hinderances on creating suppy (or, as people like to say: "cars don't buy cars").

Taxing the higher incomes doesn't necessarily destroy more jobs than it creates; in fact, it may create even more than it destroys, or at least it may distribute resources more fairly among different social classes (and a minimum of access to basic resources for everyone is not necessarily "class warfare", but a basic requirement for a civilized society).
 

CaptainObvious

Son of Liberty
V.I.P.
#5
Its more than obvious that the Uber-Wealthy do not outnumber the Middle Class by any means. So what I cant understand is why the politicians dont seem to understand that if the powers are in the numbers then the dollars are also in the numbers. I would be curious to see a graph or something to represent how many middle/lower class workers it would take to be equivelant to One Rich Business Owner. Then take that number, and compare it to the Huge Lay-offs that have occurred already.
But what sells for a politician is creating class envy, the "let's sock it to the rich, the dirty bastards". The politician isn't necessarily interested in creating jobs, he's interested in getting votes. Economic implications and political implications rarely go hand in hand. By the time the ill effects of bad economic policies are felt he has either moved on, or finds a another scapegoat to blame for people plight.

And to finish, I'm glad that the media is finally recognizing that Obama's D.O.T. spending is not fixing Unemployment just as the whole Construction world said. If he or his advisors had listned to ANY of the Construction world... they'd have realized it wouldnt in the first place and the money could have been put to better use on projects that would have actually had a snow balls chance in hell to create jobs. Congrats Obama, maybe next time you can put those big ears to use.
I am too, but I won't hold my breath in Obama realizing his mistake or listening to anyone.
 

Jeanie

still nobody's bitch
V.I.P.
#6
When you say "tax the rich", what do you mean specifically? Do you mean a Small Business Tax? Do you mean reversing the Jobs and Growth Tax Relief Reconciliation Act of 2003 (the Bush Tax Cuts)? Do you mean a tax on a corporation's profits?
 

icegoat63

Son of Liberty
V.I.P.
#7
Taxing the higher incomes doesn't necessarily destroy more jobs than it creates; in fact, it may create even more than it destroys, or at least it may distribute resources more fairly among different social classes
I respect your opinion here and even see where you're coming from...but I'm guessing the may part is stressed right? Although that money could be reallocated to potentially create jobs... The US government has failed to do so adequately in this situation. Large structural marvels such as the Dams / Reservoirs were great examples of the Government using its funds in a successful way and creating multi-year jobs for anyone willing to pilot a shovel. Unfortunately projects like that, for lack of better words, take a lot of balls to begin.

And the Unchanging high unemployment rate right now still begs the question

"where are these government created jobs we were promised?"
 

R1pperZ

Registered Member
#8
From my understanding Obama was giving tax credits to business's to relieve some of the presser the recession had caused so they feel comfortable enough to continue employing people instead of cutting their losses and closing.
In turn more people are employed so they can spend money and business's continue to do enough business to stay afloat. Sounds to me like a logical idea but obviously not an exact science.

Makes allot more sense that giving banks large interest free loans so they can continue to give exects multi-million dollar bonuses...
 

Sim

Registered Member
#9
I respect your opinion here and even see where you're coming from...but I'm guessing the may part is stressed right? Although that money could be reallocated to potentially create jobs... The US government has failed to do so adequately in this situation. Large structural marvels such as the Dams / Reservoirs were great examples of the Government using its funds in a successful way and creating multi-year jobs for anyone willing to pilot a shovel. Unfortunately projects like that, for lack of better words, take a lot of balls to begin.
Agreed, the "may" is stressed. It begins with the kind of tax -- some kinds of taxes on "the rich" may burden companies more than other kind of taxes (I am no expert, so I can't bring good examples; but I think so much should be obvious).

Also, you are right, there are smart and ... less smart ways to spend the money, regarding the effectiveness of creating jobs.

At any rate, I'd make a difference between the financial sector and the real economy: Before the bubble burst in 2008, the highly unregulated financial sector had really gotten out of control. I think much of the money that had been made there had not much to do with good performance, and even less with creating something of worth for the entire society -- but it was high-risk gambling with the welfare of all of us by a few people, and it would almost have costed us our future.

So regulating and taxing here has nothing to do with "hating the rich" or "envy", but on the contrary would be a contribution to restore even a minimum of fairness.

As for government programs: All governments have used some Keynesianism -- using tax money for stimulating the economy -- to some degree, even Bush II. Bush, for example, pumped billions into rearmamament. Huge sums. Much of that is responsible for the growth rates during the mid 00's -- that, and the gambling money Greenspan pumped into the bubbles. So if Obama is responsible for it, you have to blame Bush too. Just saying. :lol:

And the Unchanging high unemployment rate right now still begs the question

"where are these government created jobs we were promised?"
Well, if we are interested in honestly answering this question, we would have to look into "what if" estimates. In theory, it's well possible unemployment would not just be at 10%, but at 20%, if it hadn't been for the government stimulus. Or it could be lower. Without looking into these estimates, we cannot know (at least I am not expert enough to answer this question).

But over here in Europe and Germany, it's a general consensus, even among the die-hard neoliberals of the libertarian FDP party, that the only thing that saved our Western economies from completely going down the gutter, and from having another depression as in the 1930s, were the quick and large government stimulus programs. Nobody really questions it over here, and I mean really nobody.
 

CaptainObvious

Son of Liberty
V.I.P.
#10
At any rate, I'd make a difference between the financial sector and the real economy: Before the bubble burst in 2008, the highly unregulated financial sector had really gotten out of control. I think much of the money that had been made there had not much to do with good performance, and even less with creating something of worth for the entire society -- but it was high-risk gambling with the welfare of all of us by a few people, and it would almost have costed us our future.

So regulating and taxing here has nothing to do with "hating the rich" or "envy", but on the contrary would be a contribution to restore even a minimum of fairness.
I keep hearing people say this and I have to disagree with it. A lot of it was based on hating the rich and envy because the government was buying up bad loans through Freddie and Fannie. Banks were encouraged to lower standards and lend (under the guise of helping poor people get housing) since the goverment was going to buy the loan anyway, then turn around and sell mortgage backed securities. Too many times people blame deregulation when the actual culprit was too much government involvment in the free market. At some point the artificial housing prices HAD to burst thus making the mortgage backed securities worthless.


As for government programs: All governments have used some Keynesianism -- using tax money for stimulating the economy -- to some degree, even Bush II. Bush, for example, pumped billions into rearmamament. Huge sums. Much of that is responsible for the growth rates during the mid 00's -- that, and the gambling money Greenspan pumped into the bubbles. So if Obama is responsible for it, you have to blame Bush too. Just saying. :lol:
Completely agree. The Bush administration and the Fed was an economic failure as well.