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View Diary: Business Owners speak: Tax Cuts don't Create Jobs -- they Create Deficits (137 comments)

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  •  Higher taxes on the wealthy create jobs. (6+ / 0-)

     Taxes provide a double incentive for the wealthy to re-invest in their businesses.  First, if there is no penalty for sidelining your money in the first place, people will happily take profits first.  Taxes stimulate business investment by creating a compelling reason to put the money to use versus pulling it out of their business to spend or hoard.  Imagine it as a reverse ponzi scheme, where a smaller profit margin necessitates a larger investment to earn your profit, putting more people to work as you ramp up production and buy material and equipment.  Low taxes make it possible for the wealthy to remove obscene profits at the lowest expenditure level, which cuts out the need to create more jobs and grow their businesses.  (We are also rewarding them for their laxity by gutting the estate tax, so their kids don't have to work at all.  Thus, they can close the "factory doors" of their parents' businesses or sell, or move them overseas without any more thought than selling a hundred pounds of gold from their portfolios.)
      The second incentive is that there are tax breaks for investing in your business.  Therefore, returning your profits to your business becomes not just smart business sense, but a tax shelter itself.  When taxes are lowered on the wealthy, it destroys this mechanism of re-investment and destroys jobs.

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