Friday, October 18, 2013

Nick Hanauer "Rich people don't create jobs"

I trust that the viewer understands that parts of this might be flawed.  Increasing taxes in order to have the government waste it on new projects only makes the economy less efficient.  It has been shown that as government spending portion of the economy goes up, the investment portion of the economy goes down.  As investment goes down, economic growth goes down.  The countries with the least amount of government spending have the most amount of economic growth.  

Although a rich person might not buy 3000 cars, his money, whether he owns his own business or just invests his money, is going to be involved in all sorts of economic activity that affects the economy.

From what I have read it is a myth that the rich pay a lower tax rate than the middle class.  The numbers I have seen considered over the average indicate the opposite.  Right now the people with the lowest 50% of income pay extremely little in income taxes.  The top 1% make around 25% of all income but pay around 40% of all income taxes.  (Social security taxes, however, are at a flat rate up to a certain level of income and then stop.)

There are a few people who benefit from low dividend taxes, but this doesn't tell the whole story:  Dividends get taxed twice, once at the corporate level, and once at stockholder level.  Imagine two scenarios:  One where you privately own your own business and earn $300,000, and the other scenario where you are the sole owner of a corporation which makes $300,000 and distributes the profit to you as dividends.  In the second scenario, the highest corporate tax rate in the world will end up costing you more in taxes.  You might only pay 15% on the money, but the corporation paid 38% first.

I thought that I heard that capital gain and dividend taxes were going up.

On the other hand if you want to increase taxes to pay down the national debt, I might not argue with you.

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