Right is wrong on taxing the rich
Let’s cut the baloney about jobs and rich people’s taxes. If corporate profits automatically turned into jobs for the little folk, the unemployment rate would be plummeting.
It happens that company earnings now exceed their lofty peaks of the housing boom. And big-business balance sheets are sloshing in cash. Corporate America’s decision to stick with its current work force is not for a lack of dough.
Companies don’t create jobs because they have extra money jingling in their pockets. They take on new workers when they want to expand, and right now the demand’s not there to warrant that growth. Corporations are in the business of maximizing profits for the benefit of their managers and shareholders. They’re not in the business of creating jobs, nor should we expect them to be.
And so how should we respond to Republican claims that restoring Clinton-era income tax rates for the wealthiest 2 percent would destroy jobs? We shouldn’t. They are irrelevant.
An employment policy based on further enriching the richest Americans – who may or may not spend their wealth on job-creating ventures – is like trying to feed chickens in the barnyard by dropping feed from an airplane. It’s far more logical to focus tax cuts on activities that are likely to expand American business.
That’s why President Obama’s proposal to make the research and development tax credit permanent – something many Republicans have advocated – makes more sense. It would give companies an incentive to spend their money on their businesses.
But to politically sell this fixation on keeping rich people’s taxes low, Republicans must convince wage-earners that their jobs depend on enlarging a few personal fortunes. Thus, Republican House Minority Leader John Boehner of Ohio characterizes the Obama plan to let George W. Bush’s tax cuts for the top brackets expire as “job-killing tax hikes.”
Republicans made similar hysterical warnings when Bill Clinton proposed raising taxes for the richest 1 percent early in his administration.
“This is really the Dr. Kevorkian plan for our economy,” Rep. Christopher Cox, R-Calif., said in May 1993. “It will kill jobs, kill business and, yes, kill even the higher tax revenues that these suicidal tax increasers hope to gain.”
It didn’t quite turn out that way. America gained a net 21 million jobs during Clinton’s two terms (against only 3 million during Bush’s). Business investment was higher in the Clinton years. The economy grew more, as did tax revenues, and Clinton ended his presidency with a budget surplus. Even the rich got richer under Clinton, but most people didn’t seem to mind because everyone else was doing better, too.
For years, the right has cultivated an air of servility in a fearful work force. I want to know what magic potion Republicans use to make so many Americans assume that they are wards of the rich.
Employers generally don’t take on workers as a charitable gesture. They may be splendid human beings, but they hire you in the belief that your sweat will contribute to the business’s bottom line. The employer’s need for your labor and your desire for a paycheck makes for a mutually beneficial relationship. But it is not a one-way street.
Americans generally don’t like class warfare. Labeling any tax increase for upper incomes as such is a time-honored way to bully the public into silence. Actually, it’s not too much to ask the top sliver – whose wealth is running away from that of even ordinary millionaires – to do more to contain our soaring deficits.
If the rich get richer from a recovering economy, and they will, then good for them. But they’re not owed tax cuts besides.
Froma Harrop is a columnist for the Providence Journal.