

Nick Hanauer: Raise Taxes on Rich to Reward True Job Creators - cawel
http://www.businessweek.com/news/2011-12-07/raise-taxes-on-rich-to-reward-true-job-creators-nick-hanauer.html

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JumpCrisscross
The implied premise of this article is that government should encourage
consumption and discourage saving/investment. Yes, this produces growth, but
it also levers up the economy. The article also presumes a closed system, i.e.
no imports or exports.

 _It’s just crazy to believe that any of this is more beneficial to our
economy than hiring more teachers or police officers or investing in our
infrastructure._

The assumption here is that the marginal public sector investment yields more
than the marginal private sector investment. This has not been shown to be the
case empirically (there's a solid return up to a point beyond which one is
staffing NASA with bureaucrats and building un-inhabited cities in rural
China).

 _It is mathematically impossible to invest enough in our economy and our
country to sustain the middle class (our customers) without taxing the top 1
percent at reasonable levels again._

Yes, but we conveniently fail to declare what "reasonable" means. Taxing the
top _10%_ of earners (around 150k) at 60% would close the gap, but it would
also have many unintended consequences. You can't close the hole from raising
taxes on a limited slice of the voting population alone.

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jasonabelli
I completely agree with this. I have been saying it for years and it gets
people very angry. This is definitely a view that a minority of people that I
talk to believe. Even most working class people think that the super rich
drive the economy it just isn't true anymore. I think it may have been when
the country was in it's early stages and mining our resources and developing
infrastructure was a larger portion of our economy. I believe now that our
economy is driven by the masses of consumers. Give the poor a billion dollars
and a billion dollars gets put back into the economy that year. Give the rich
a billion dollars and and a billion dollars goes into a mutual fund. The later
has far less of an economic impact.

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wballard
Guys, rich people don't keep a Scroogey-McDuck pile, large concentrations of
funds make venture possible, as it lowers the marginal risk. Try having our
current startup fueled cycle without concentrated wealth.

Can we really drive the human experience and technology higher by diluting our
funds in an effort to normalize and support, as taxation would do creating obs
the average can fill -- or should we concentrate and invest in those with the
most potential?

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bithive123
We can do both; rhetoric in this country has gotten to the point where simply
letting tax cuts for the wealthy expire is spun as "class warfare".

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cawel
My favorite paragraph is this:

 _It’s true that we do spend a lot more than the average family. Yet the one
truly expensive line item in our budget is our airplane (which, by the way,
was manufactured in France by Dassault Aviation SA), and those annual costs
are mostly for fuel (from the Middle East). It’s just crazy to believe that
any of this is more beneficial to our economy than hiring more teachers or
police officers or investing in our infrastructure._

That's an excellent counter-example of trickle-down economics.

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JumpCrisscross
Actually, that it is more an example of tribalism and xenophobia. Why is a
manufacturer inherently evil for a crime no greater than not being American?

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msellout
He was not indicating evilness. He was pointing out that the money flows out
of the United States. The article is directed at people who are trying to
create more US jobs and increase US GDP.

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functionoid
Do rich people use more road, parks or any public facilities more than the
average person? In fact they use less. Is they any other reason than a rich
person makes more money so should pay more taxes. In that context rich should
also pay more at restaurants and for all other things that will also help the
economy.

They worked hard to create the wealth and jobs in the ventures they created.
Any one disagreeing that entrepreneurs means wealthy for this article do not
create jobs, I have a question for them, does government create jobs?

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carsongross
The problem I have with this article, and any discussion that simply involves
"the rich" is that it doesn't distinguish between the true innovators (to be
trite, the Steve Jobs' of the world) and the (much larger) financializers, who
truly do not generate any wealth, but rather suck productive and innovative
capacity dry.

Steve Jobs gave us plenty even if he had never paid a dime in taxes.

Hank Paulson ate arbitrage for decades, then bailed out the banks after
_exactly the policies he advocated for_ collapsed on themselves, and should be
in jail.

If you don't distinguish between these two types of rich, you are being
stupid.

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makhanko
Great article. Being an Economics major in my previous life I always suspected
that Supply-side economics was kind of bullshit. This just nails it - "When
businesspeople take credit for creating jobs, it is like squirrels taking
credit for creating evolution. In fact, it’s the other way around."

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bmelton
Taking the opposite stance:

"The annual earnings of people like me are hundreds, if not thousands, of
times greater than those of the average American, but we don’t buy hundreds or
thousands of times more stuff. My family owns three cars, not 3,000."

Nor does your family impose 3,000 times the burden on the economy either
(which might necessitate a greater income tax), or drive 3,000 times the
average (which might necessitate a greater road tax) or what have you.

Needless to say, I disagree with the premise of progressive taxation, but it
is of course a complicated subject, so I'm always willing to hear more on the
matter.

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bithive123
Care to elaborate on why you "disagree with the premise of progressive
taxation"? The only arguments I've encountered to date are morality-based and
stem from a world view that says all taxes are immoral.

Leaving the issues of government waste and the morality of taxation aside, I
don't see how anyone can dispute the fact that an extra $10,000 (pick any
number) per year means a lot less to someone making $500,000 than it does to
someone making $40,000. If there are going to be taxes, it seems almost
obvious (I dislike that word but am using it here) that they should be
progressive.

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bmelton
A person making $500,000 a year paying 10% of his income to taxes would pay
$50,000 in taxes. A person earning $40,000 a year paying 10% of his income in
taxes would pay $4,000 in taxes. This isn't progressive taxation, it is
linear, as both parties pay the same amount in taxes. I _do_ disagree with the
premise of taxes on the whole, but I am comfortable paying 'an equal share'.

Progressive taxation, which I abhorrently disagree with, is when you penalize
the higher income for having earned more. Are they better able to burden the
load? Perhaps, but now we're punishing success, and removing the incentives
for the lower income families to strive for more, both because they're less
likely to reap their rewards (due to the progressive taxation) and because the
needs of the poor are better met by the taxes of those richer than them.

What this also gets does is foster more of the environment that we have, where
federal waste becomes more eggregious and tax dollars are diverted even more
to the benefit of those paying the lion's share, leaving the lower class even
worse off, which generally leads to their crying for even more progressive
taxation.

Again, this is just my understanding of how things will work. Your opinion may
vary.

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msellout
Having a higher marginal tax rate is not a penalty. Among other things,
progressive taxes balance the regressive nature of disposable income. As the
article mentions, people with double the income do not have double the
expenses. With a flat/linear tax, a wealthier person pays a smaller portion of
their disposable income in taxes than does a poor person.

You could also see progressive taxes as counteracting the winner-take-all
phenomena of the market. Taxes should be progressive to the extent that luck
affects market outcome.

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chrismealy
It's all true, but it's sad that people only listen if a rich person is
talking.

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mdda
Maybe because if a non-rich person says it, it could be self-serving. Having a
billionaire make the same self-sacrificing claim lends it credibility.

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webjprgm
Exactly. Which is why I'm actually thinking about this article instead of
ignoring it out of hand like I do for any article that makes a fuss about
changing the tax system.

The other part (respecting who says what) is partisan politics. Republicans
are set on their anti-tax stance while Democrats are set in other stances that
I cannot agree with. When you are stuck voting R vs D and not issue by issue,
what do you choose? Then choosing one side, I tend to believe more of what
that side says rather than carefully considering issue by issue. (A mental
practice which I am trying to change.) This is also kinda why I prefer power
to flip-flop between R and D vs. always be one side.

