I honestly watch John Boehner every time he defends not taxing the richest Americans to see if I can find a valid reason why this is so. I have yet to hear it. The only argument I hear is that taxing the richest people will kill jobs created by the “job-creators.” This is nonsense.
First this is because there is one thing that humans do that is logical but doesn’t help the economy: we save money.
It doesn’t take an economics degree to know that the circulation of money stimulates the economy.
So, unless all CEOs are constantly on the brink of bankruptcy because they are perfectly hiring the maximum number of workers to maintain a maximal production level, taxing them will not affect the economy, it will simply reduce the money that goes into their savings accounts.
Further, what do you think would happen in the conundrum of a large company being taxed at a rate that made them choose between going into the red temporarily and growing the company by hiring the number of workers required or staying in the black and letting the company stagnate because it doesn’t have enough workers? If you have any sense, you would take the hit and go into the red because the competition, which is dealing with the same taxes, might try to grow their company larger than yours. Therefore, intelligent CEOs would still take a hit to grow their company, so long as the increased taxes were reasonable (which Obama’s suggestions are).
I admit that this argument that taxation reduces hiring does actually apply to small- and medium-sized companies because many of these companies are actually often in jeopardy of going bankrupt with or without additional taxation. However, we rarely see a company the size of Walmart go bankrupt by minor disruptions in its business.
So, in short, since a CEO is always going to try to maximize their company’s growth, this argument that taxation on the wealthiest Americans will kill jobs doesn’t hold water.
- Higher Tax Rates on the Wealthy Won’t Draw More Revenue (WordPress.com) [Counter-argument to my blog post]
- John Boehner: No Tax Rate Boost To Avert Fiscal Cliff (huffingtonpost.com)
- Fiscal Cliff Tax Rate Hikes Will “Greatly Impact Small Businesses” (speaker.gov)
- Conservative Exceptionalism (dailykos.com)
- Obama claims mandate to raise taxes on the richest (tv.msnbc.com)