Do rich people really create jobs

goldman in da house:

Err yeah not like there are any other factors that determine economic prosperity other than tax rates?

yea, but If you listen to the talking heads, this is one of their theses behind lower taxes. Higher taxes will destroy jobs and economic prosperity

futurectdoc:

What's slowing us down is regulation, it heavily favors large enterprises, small ones have much more difficulty complying. In fact if you have enough money you can lobby for the tax code to suit your needs or onerous regulations, well onerous to small competitors. Growth can't continue like in India or China, they are starting from much lower standards of living as what were formerly predominantly agrarian societies. We're post-industrial, we need to reindustrialize and recognize our standard of living will likely fall.

Also, growth in China / India is fueled by corruption and is NOT sustainable at the current rate and methods...

rls:

I am sick and tired of these circular arguments. Simple line of questioning for this Nick Hanauer-

Me: Where do those customers get their money to consume? Nick: From their income, their jobs. Me: And who employs them? How can capital-poor person, or capital-poor firm for that matter, pay middle class wages?

See, demand is not the driver of economies. Check out any poor country- they have all types of pent-up demand. Supply is the hard part of the equation. Designing and making an iPod is hard- wanting one is not. In early markets, artisans worked for royalty. The composer, the sailor, the inventors, they needed a patron to fund their activities and the patron was the primary consumer- the average person had no discretionary income. Early businessmen were able to produce on larger scales and thus widen their consumer base by reducing costs and lowering prices. But those early businessmen needed capital. So, either they were rich or borrowed it from rich people (King, baron, duke etc.) The Industrial Revolution represented an acceleration of this basic principle.The catalyst to all successful economic systems is capital and capital formation (even the Marxists wanted the capitalists to create assets before they purged them). By definition, poor and middle class people lack significant amounts of capital. This is precisely why poor countries despite high demand for relatively cheap products (food, water, clothing) cannot meet their basic needs- by definition, they lack capital to satisfy their demands.

There is a symbiotic and synergistic relationship between production and consumption. But, one should be under no illusions that demand can magically create supply. Otherwise, where the hell are my transporter and Holodeck?

This tax debate is so laced with fallacies, I'm not even sure I want to wade into the argument, but, let's put the OP's fallacy to rest- The seeming 'correlation' of nominal tax rates does not align with the effective tax rates. People paid less in taxes in the past, even when the nominal rate hit 90%. Two words- "loopholes" and "deductions". And back then they didn't have the negative connotation they have today. If you owned a business in 1950-60, you could write virtually all of your personal expenses off as business expenses. Look at the root word - "tax" i.e. to burden. It's hilarious to actually listen to someone who is trying to convince you that burdening success will not discourage work effort- "Thank you, sir! May I have another?" Doesn't anyone remember this part of the reason the socialist model doesn't work- no one wants to do all that extra work without any extra benefits. To arrive at the logical conclusion of Nick Hanauer and Henry Blodget's argument about middle class income's importance to the economy, the government would have to tax the rich and give it to the poor directly so they can spend it- clearly, that's crap. I'm not trying to accumulate capital so the government can take it and give it some other guy so he can spend. If that's the deal, then I'm going to blow all my capital before Uncle Sam comes a-knocking.

Buddy, where do you think you are? This is WSO.

Take your "common sense" and "historical evidence" elsewhere.

rls:

I am sick and tired of these circular arguments. Simple line of questioning for this Nick Hanauer-

Me: Where do those customers get their money to consume? Nick: From their income, their jobs. Me: And who employs them? How can capital-poor person, or capital-poor firm for that matter, pay middle class wages?

See, demand is not the driver of economies. Check out any poor country- they have all types of pent-up demand. Supply is the hard part of the equation. Designing and making an iPod is hard- wanting one is not. In early markets, artisans worked for royalty. The composer, the sailor, the inventors, they needed a patron to fund their activities and the patron was the primary consumer- the average person had no discretionary income. Early businessmen were able to produce on larger scales and thus widen their consumer base by reducing costs and lowering prices. But those early businessmen needed capital. So, either they were rich or borrowed it from rich people (King, baron, duke etc.) The Industrial Revolution represented an acceleration of this basic principle.The catalyst to all successful economic systems is capital and capital formation (even the Marxists wanted the capitalists to create assets before they purged them). By definition, poor and middle class people lack significant amounts of capital. This is precisely why poor countries despite high demand for relatively cheap products (food, water, clothing) cannot meet their basic needs- by definition, they lack capital to satisfy their demands.

There is a symbiotic and synergistic relationship between production and consumption. But, one should be under no illusions that demand can magically create supply. Otherwise, where the hell are my transporter and Holodeck?

This tax debate is so laced with fallacies, I'm not even sure I want to wade into the argument, but, let's put the OP's fallacy to rest- The seeming 'correlation' of nominal tax rates does not align with the effective tax rates. People paid less in taxes in the past, even when the nominal rate hit 90%. Two words- "loopholes" and "deductions". And back then they didn't have the negative connotation they have today. If you owned a business in 1950-60, you could write virtually all of your personal expenses off as business expenses. Look at the root word - "tax" i.e. to burden. It's hilarious to actually listen to someone who is trying to convince you that burdening success will not discourage work effort- "Thank you, sir! May I have another?" Doesn't anyone remember this part of the reason the socialist model doesn't work- no one wants to do all that extra work without any extra benefits. To arrive at the logical conclusion of Nick Hanauer and Henry Blodget's argument about middle class income's importance to the economy, the government would have to tax the rich and give it to the poor directly so they can spend it- clearly, that's crap. I'm not trying to accumulate capital so the government can take it and give it some other guy so he can spend. If that's the deal, then I'm going to blow all my capital before Uncle Sam comes a-knocking.

tl;dr

You lost me when you started talking etymology.