For all the gnashing of teeth about restoring taxes to what they were before Bush temporarily lowered them, turns out most of those in the upper brackets actually wouldn’t mind the increase. Unfortunately, the one-third is louder than the two-third majority…
As Congress and President Obama fight over the Bush tax cuts, a small number of left-leaning rich people have come out in support of paying higher taxes. The most famous are the members of the Responsible Wealth Project, who say they pay too little in taxes and want to address inequality.
They may be an eccentric minority, or (in the view of conservatives) a lunatic fringe. But a Quinnipiac University poll this year showed nearly two-thirds of those with household incomes of more than $250,000 a year support raising their own taxes to reduce the federal deficit.
(click to continue reading ‘Tax Me More’ Says Wealthy Entrepreneur – The Wealth Report – WSJ.)
Garrett Gruener recently wrote:
For nearly the last decade, I’ve paid income taxes at the lowest rates of my professional career. Before that, I paid at higher rates. And if you want the simple, honest truth, from my perspective as an entrepreneur, the fluctuation didn’t affect what I did with my money. None of my investments has ever been motivated by the rate at which I would have to pay personal income tax.
As history demonstrates, modest changes in the tax rate for wealthy taxpayers don’t make much of a difference if the goal is to build new companies, drive technological development and stimulate new industries.
(click to continue reading The Bush tax cuts: an entrepreneur’s perspective – latimes.com.)
and a little historical perspective:
When inequality gets too far out of balance, as it did over the course of the last decade, the wealthy end up saving too much while members of the middle class can’t afford to spend much unless they borrow excessively. Eventually, the economy stalls for lack of demand, and we see the kind of deflationary spiral we find ourselves in now. I believe it is no coincidence that the two highest peaks in American income inequality came in 1929 and 2008, and that the following years were marked by low economic activity and significant unemployment.
What American businesspeople know, and have known since Henry Ford insisted that his employees be able to afford to buy the cars they made, is that a thriving economy doesn’t just need investors; it needs people who can buy the goods and services businesses create. For the overall economy to do well, everyday Americans have to do well.
Now that the Bush tax cuts are about to expire, Republicans are again arguing that taxes should remain low for the wealthy. The idea is that this will spur people like me to put more capital to work and start more ventures, which will create new jobs, power the economy and ultimately produce more tax revenues. It’s a beguiling theory, but it’s one that hasn’t worked before and won’t work now.
Instead, Congress should let the Bush tax cuts expire for the wealthiest Americans and use the additional tax revenues that are generated to invest in infrastructure and research. “Invest” is the right word. Putting money into infrastructure — such as roads, bridges, broadband, the smart grid and public transit — as well as carefully chosen research initiatives provides a foundation for future growth. As important, it puts funds in the hands of those who will spend them, generating demand that will pull us out of our economic crisis and toward a new cycle of growth.
Job growth, especially of the small business and micro business size is not predicated on personal tax rates. If you are an entrepreneur and you have a good idea for a start-up, you aren’t going to wait for favorable tax rates, or be discouraged by unfavorable tax rates.
And Mr. Gruener’s larger point is exactly correct: the government should be investing in infrastructure (fiber optics, efficient energy, transportation), not hoarding pennies.1
Footnotes:- Especially not pennies, remember? [↩]