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I have serious issues with the idea that private equity market gains create jobs in the United States. I have no idea whatsoever how Mitt Romney's private equity market experience is supposed to bolster his claim that he knows how to create jobs. Nor do I see any compelling reason to believe that lowering the marginal tax rates of the wealthy gives them an incentive to create jobs- nor further that raising their marginal tax rates removes an incentive that they would otherwise have to create jobs in the United States.

more below the squiggly line.

Like many Americans, I am skeptical of Mitt Romneys ability to create jobs. His work at Bain created wealth for himself and his pals, but did not create jobs for other people. As I was thinking about this and the need to raise taxes on the wealthy, a thought struck me. Now, the concept of the thought is undoubtedly not original. Nevertheless, I have never heard it expressed in the way that I am about to express it. The extremists in the Republican Party believe that taxes should not be raised on the wealthy because they believe that it would disincentivize the wealthy to hire people. However, raising taxes on the wealthy does not remove their incentive to hire people. Changing the percent at which an individual is taxed has little to nothing to do with hiring. Keeping their income tax rates low does not incentivize them to hire; raising them does not remove that incentive.  Raising the rate for people at a certain income level means that they will be taxed at a higher percentage if they make more money, not if they hire more people. Lowering their rate does not give them an incentivize to hire more people. It gives them more of an incentive to make money. But people, like Mitt Romney, often make money without hiring people (productivity is very high), certainly not necessarily hiring people in the U.S. . The incentive to make more money is what would be altered, to a relatively small degree. There is no incentive in the tax code (marginal rates - I am only referring to here) to hire people. It just plain does not exist. It is simply a flawed assumption that creating American jobs is a natural, organic outgrowth of making money. And we can see, historically, just how flawed it is in cases like Bain, among others. Republicans who assume otherwise are ill-informed, dishonest, and not thinking clearly. Furthermore, supply side economics is magical thinking, voodoo economics, does not produce job growth, and those supply side tax cuts clearly do not pay for themselves.

www.RomneyEconomics.com

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Comment Preferences

  •  There is actually some evidence... (4+ / 0-)

    ...that raising tax rates, both on wealthy individuals AND corporations, gives them MORE incentive to hire people, not less.

    Labor costs count as losses when calculating taxes on business income. Therefore, money spent on hiring employees is not taxed.

    But the bottom line is that hiring decisions, for the most part, are not made based upon tax rates. They're made based upon demand. A business only hires the number of people it needs to hire to meet the demand for its goods or services.

    Still, the tax code CAN be used to provide further incentives for businesses to hire, and for companies doing business in the United States to hire Americans, by providing tax breaks and incentives to do so - something Obama advocates, and something Republicans loathe because they don't like the idea of the tax code being used for "social engineering" (Republican-speak for "helping poor and middle class Americans").

    I vote we run Rick Scott out of Florida on a high-speed rail.

    by ObamOcala on Sun Jun 10, 2012 at 04:45:49 AM PDT

    •  but marginal tax rates for individuals do not (2+ / 0-)
      Recommended by:
      sharonsz, joe wobblie

      manifest any significant, predictable, direct relationship historically or in data that I am aware of with the creation of jobs in the US.

      I agree that other parts of the tax code can be used to incentivize people to hire Americans , with limited success I believe. I give Dr. Krugman a lot of credence and unless I have completely misread him, what I wrote is consistent with his writings (except he is an expert and would write it better, source it...., ).

      •  Au contraire, Mon frere... (4+ / 0-)
        Recommended by:
        justmy2, blueoasis, Roger Fox, labwitchy

        The deployment of 'Supply-side economics' has caused two depressions;
          what else need you know!?!

        ! The swinistic greed and racial hatred of the American ruling elite is abysmal !

        by joe wobblie on Sun Jun 10, 2012 at 05:11:10 AM PDT

        [ Parent ]

        •  No bucket of brains.... (2+ / 0-)
          Recommended by:
          blueoasis, labwitchy

          You don't have to read Adam Smith, study Keynesian economics or the spurious works of any other capitalist psuedo-economists, to know that when people have NO JOBS and NO MONEY they cannot buy THINGS, and that then the economy will tank.  It does not take a bucket of brains to know that!
          'Supply-side economics' or 'The Horse and Sparrow Theory', as elucidated
          by John K. Galbraith:
            "If you feed enough oats to the horse, some will pass through to the sparrows." is just plain, putrid HORSE MANURE!
          Of course our neo-fascist enemies love to use 'Trickle-down theory' in their attempts to dupe The American People!
          The only REAL 'trickle-down' these race-baiting, swinistically greedy oligarchists can supply, is something yellow, warm, wet and wonderful on top of the haid!

          ! The swinistic greed and racial hatred of the American ruling elite is abysmal !

          by joe wobblie on Sun Jun 10, 2012 at 05:47:58 AM PDT

          [ Parent ]

        •  you are being nice (1+ / 0-)
          Recommended by:
          joe wobblie

          From 1800 to 1930 there was a economic downturn every 4.3 years, a full blown depression every 18-20 years.
          Shedding 20-30% of jobs, peak to trough loss of 15% to 33% 28 out of 31 times lasting longer than one year.

          In 50 years of New Deal tax policy and GLass Steagal II bank firewall, 3 recessions were worse than negative 1%. Thats what I call a stable economy......... DOH ! ! !

          Read it and weep
          http://en.wikipedia.org/...

          That should be enough to make a Keynesian out of everyone.......................

          FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

          by Roger Fox on Sun Jun 10, 2012 at 10:53:37 AM PDT

          [ Parent ]

      •  With higher top rates (0+ / 0-)

        there is room for deductions and exemptions for domestic investment specifically in emerging tech and markets.... The '86 TRA wiped out a lot/most of those.

        Compare statutory rates and effective income rates in 1980 and now. You'll see the so called level playing field has wiped out incentives, part of New Deal tax policy.

        ........Top rate... effective rate
        1980... 70%...............22.3%
        Today...35%..............19-20%

        Since the 86TRA, we've had 3 recessions with a jobless recovery, SOP now. For 50 yrs, New Deal Tax policy meant every recovery from a downturn saw job creation, making those recessions shorter and shallower.

        And what makes it worse is that we used to spend 5% of GDP on infrastructure, last year we spent 1.3%, thats a shortfall of 12 to 15 million jobs right there.

        FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

        by Roger Fox on Sun Jun 10, 2012 at 10:48:04 AM PDT

        [ Parent ]

  •  what i imagine is that (3+ / 0-)
    Recommended by:
    johnny wurster, coffeetalk, Gooserock

    in making business decisons there is an ROI calculation being made. Now if tax rates were 100% there would never be any return (except by cheating the tax laws) and there would be no investment, no business and no jobs.

    Lowering the rates to 90% will make some investments look like good risks and the would be some investment, some business and some jobs.

    Same at 80%...70%...60%....etc.

    Lowering the tax rate business pays will always push some additional ventures over the line from too risky to acceptably risky.

    If i can expect a business return 100K a year and the rate is 50% then my income will be 50K. If the rate is 30K then my income is 70K and that sure sounds a lot better reason to start a new business.

    •  You would rather (1+ / 0-)
      Recommended by:
      Gary Norton

      earn zero than 50K?

      "A lie is not the other side of a story; it's just a lie."

      by happy camper on Sun Jun 10, 2012 at 05:53:54 AM PDT

      [ Parent ]

      •  yes (1+ / 0-)
        Recommended by:
        coffeetalk

        but if i already have a job that pays 45K then i don't take the risks for an extra 5K.  

        But for 25K i might. IDK, but i would guess that most people starting new businesses already have jobs.

        Also, if i have to sink 200K into the project to get it off the ground, then the payback period has been reduced by over 25 percent.

    •  The History Is That We Only Had a Panic And De- (3+ / 0-)
      Recommended by:
      blueoasis, Gary Norton, Roger Fox

      pression free economy during the 50 years New Deal Anomaly which included steeply progressive individual taxation.

      The entire rest of our history we've had major bubbles, panics and worse.

      A post agrarian economy favors a shitload of risks that need to be suppressed by limiting the size and speed of jackpots.

      We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

      by Gooserock on Sun Jun 10, 2012 at 06:05:28 AM PDT

      [ Parent ]

    •  One point (1+ / 0-)
      Recommended by:
      phonegery
      If i can expect a business return 100K a year and the rate is 50% then my income will be 50K.
      This is simply not true. Lets assume for the sake of arguement that 100k is in the fictional 50% bracket...

      You would pay 10% on the 1st $8700

      15% from $8700 to 35k

      25% from 35k to 85K

      Little thing about brackets comes into play.

      In 2012 the top bracket of 35% does not come into effect untill 388k.

      FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

      by Roger Fox on Sun Jun 10, 2012 at 11:03:48 AM PDT

      [ Parent ]

      •  my 'if' applied to the entire (0+ / 0-)

        statement. It was an example to simply illustrate the point that lower rates will make additional opportunities available.

        •  Simply untrue (0+ / 0-)
          It was an example to simply illustrate the point that lower rates will make additional opportunities available.
          Lower rates allow capital to flow into every nook and cranny. Good ones and bad. The shotgun approach to national economic policy fails at that point, it becomes unstable, recessions are longer and deeper.

          FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

          by Roger Fox on Sun Jun 10, 2012 at 07:33:53 PM PDT

          [ Parent ]

    •  Lower rates should be the last reason to start (0+ / 0-)

      a new business.

      Having a good product or service, much better.

      FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

      by Roger Fox on Sun Jun 10, 2012 at 07:36:07 PM PDT

      [ Parent ]

  •  If I understand the matter correctly a whole lotta (1+ / 0-)
    Recommended by:
    Roger Fox

    businesses, especially larger ones, are making serious profits, but the problem is that either they are sitting on the money or like JP Morgan Chase are chasing the higher profits from derivative and credit default swaps and the like, where the only trickle down is to fees payable to Wall Street and not Main Street. The problem does not appear to be one of 'having' the profits but of getting those who have them to use them to create jobs, or lend to Americans if they are banks after the repeal of Glass Steagal. This is where the ordinary income taxation of capital gains comes in, I would think. The tax penalty for exporting jobs. And so on.

    •  Yes. Current tax policy incentivizes (0+ / 0-)

      capital flow to overseas and speculation.

      Domestic investment not so much.

      FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

      by Roger Fox on Sun Jun 10, 2012 at 07:38:48 PM PDT

      [ Parent ]

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