Thursday, November 29, 2012

How To Ruin The Job Creators

The President-elect ran a campaign determined to mine enthusiasm for raising the top marginal tax rate from 35% to 39%.  The GOP has assured us that such behavior will mean economic Armageddon through the ruination of the people who "create" jobs.  Some sort of magic occurs at 35%.

I do not and no one I know hires a fourth person to do three people's work, that is just stupid.  Everyone I know of that hires people hires someone because three people can't do four people's work, which means that there is that much demand for the product.  If you're going to follow along on this "job creators" theme you're either telling people that rich people having some more money means they will gratuitously hire or that they spend enough money in the market place to drive that kind of demand.  I think we've dealt with the gratuitous hiring part but the demand part is ought to be as easy, 2% of the taxpayers do not buy all that much of anything (well, most yachts).

So what is the real impact?  Let's start with what marginal rate means - anything above an amount.  So, $250,000, after deductions, is taxed at the previous rates and anything above gets hit.  This would mean that of $260,000 after deductions $10,000 would be taxed at 39%.  Follow along, 10,000 x 0.39 is 3,900 and 10,000 x 0.35 is 3500 which is a grand total of another $400.  Holy shit, your taxes on Adjusted Gross Income of $260,000 will go up $400 and with that you will buy... what?  OK, sure we all know this is more about millionaires than than that 250K bunch so here's that number (assuming - ridiculously - that you somehow have $1M in ordinary income) $750,000.  Alrighty, more simple damn math: 750,000 x 0.39 is 292,500 and 750,000 x 0.35 is 262,500 so your 750K costs you $30,000 more.  That will buy one car that these people won't be seen driving or at the Federal Minimum Wage of $7.25 earning you $1580 at 40 hours for 52 weeks a whole $15,080, just less than two jobs washing the cars they actually would buy.  (no, we're not talking take-home pay)  Why does that millionaire need two additional minimum workers?  Nobody will tell you, they just squeal "job creators."

If people don't have goddam money they don't spend it on products and services.  Those people are called consumers and they produce jobs by consuming.  If 80% of the consumers are competing for 7% of the wealth there isn't going to be a lot of consuming going on out of that share.  What is actually the case is that the "job creators" are destroying jobs by sucking every last cent out of the economy.  It isn't the conservatives' bug-a-boo government that is sucking the life out of the economy, it is their protected class that is doing it.  It is real damn simple - the money is not moving around in the economy.

You can feel free to call it socialism, communism, or "punishing success" to advocate using the one tool the governement has at hand to change economic behavior, taxation, to address this concentration of wealth - but real simply, capitalism can't survive under the current conditions.  Most of the country can do pretty well under capitalism, those who can't can be addressed with an adequate safety-net, but we have today the Reaganism version of capitalism to live with and it ain't working.  Welcome to The Gilded Age aka Robber Baron Era.

People have serious doubts that the President can stick to his 39% rate which will do spit to address the problem and are worried about the safety-net...  Christ on a pogo stick.  Liberals seem to think this recent election did more than stave off absolute disaster.  Can this nation get any stupider about its plutocrat enabling?

The short answer, of course, is - Yes.

No comments: