Thursday, July 21, 2011

The Job Creation Myth

During the debt ceiling debate, Republicans have stopped referring to millionaires as "rich people." In a page right out of the Frank Luntz playbook, they've changed the phrase to "job creators."

This is their way of getting middle class Americans to vote against their own interests yet again by portraying the rich as the victims, trying to get you to believe that increasing the top marginal tax rate 3% -- to where it was during the boom years of the Clinton era -- would keep employers from hiring more workers.

Here's the question I haven't heard anyone in the media ask the GOP leaders and pundits who are spewing this new line of nonsense: if the Bush tax cuts were so good at helping rich folks create jobs, then where are the jobs? In the 8-10 years since the tax rates were decreased, where's the proof that those at the top have hired more Americans? While big businesses have pumped up their bottom line by transferring jobs overseas, where workers cost less, the ranks of the domestic job force haven't exactly swelled.

Most job creation comes not from large corporations with hyper-wealthy CEOs, but from small businesses, the vast majority of which are unaffected by the lower tax rate. As William Gale wrote in the Washington Post, "Less than 2% of tax returns reporting small-business income are filed by taxpayers in the top two income brackets -- individuals earning more than about $170,000/year and families earning more than about $210,000/year."

The other line being spewed by Republicans is, "Now is not the time to raise taxes." I'd like someone to ask Mitch McConnell and John Boehner, "When was the time to raise taxes? Can you tell me when it would be prudent?" Because if you can't, then you have to stop acting like your opposition to taxes is situational, when you know that it's the very basis of your economic world view. And because when you lowered those top tax rates, all you did was add to the country's debt. The Bush tax cuts aren't solely responsible for the deficit (the recession deserves most of the blame), but they were certainly a contributing factor -- one which could easily be reversed without harming America's middle and working classes.

I don't understand why Obama and his minions aren't making these points loudly every day that the debt ceiling debate drags on, informing the public about the hypocrisy of GOPers who raised the debt limit seven times without a squawk under a president of their own party, but now are throwing a tantrum because Obama's in the White House.

Obama should also be reminding the public that, contrary to what Republicans want you to believe, income tax rates for the vast majority of Americans -- the ones who need a break the most -- have gone down on his watch. By not repeating this truism, the White House allows conservatives to give the impression that Democrats want to raise taxes on everyone, when in fact it's just the fat cats, the top 1-2%, who would have to cough up a little bit more. And when I say "a little bit," I mean it.

Let's do some math. If a "job creator" makes a million dollars a year, and their tax rate goes up 3%, that's $30,000. Remember, we're talking income tax here, not wealth, and not counting capital gains and other non-payroll income -- just the stuff on their W-2s. If they don't give that $30,000 to the government, they can afford to hire one new employee, and pay them the stunning salary of $15/hour.

That's one person hired for each rich person who paid less taxes. At that rate, it would take 40,000,000 fat cats to employ everyone who's out of work now (not to mention the millions more who are underemployed). And that's assuming that they're going to use those 3% savings to hire someone, rather than spending it on some luxury item or a vacation with the trophy wife.

So, if all of these "job creators" have been saving that 3% since the rates went down nearly a decade ago, where are all those jobs that should have been created? Because the only positions I see being filled are as lobbyists for the rich, and they make a lot more than $15/hour.