Nick Hanauer: Raise Taxes on Rich to Reward True Job Creators

The implied premise of this article is that government should encourage consumption and discourage saving/investment. Yes, this produces growth, but it also levers up the economy. The article also presumes a closed system, i.e. no imports or exports.

It’s just crazy to believe that any of this is more beneficial to our economy than hiring more teachers or police officers or investing in our infrastructure.

The assumption here is that the marginal public sector investment yields more than the marginal private sector investment. This has not been shown to be the case empirically (there's a solid return up to a point beyond which one is staffing NASA with bureaucrats and building un-inhabited cities in rural China).

It is mathematically impossible to invest enough in our economy and our country to sustain the middle class (our customers) without taxing the top 1 percent at reasonable levels again.

Yes, but we conveniently fail to declare what "reasonable" means. Taxing the top 10% of earners (around 150k) at 60% would close the gap, but it would also have many unintended consequences. You can't close the hole from raising taxes on a limited slice of the voting population alone.

I completely agree with this. I have been saying it for years and it gets people very angry. This is definitely a view that a minority of people that I talk to believe. Even most working class people think that the super rich drive the economy it just isn't true anymore. I think it may have been when the country was in it's early stages and mining our resources and developing infrastructure was a larger portion of our economy. I believe now that our economy is driven by the masses of consumers. Give the poor a billion dollars and a billion dollars gets put back into the economy that year. Give the rich a billion dollars and and a billion dollars goes into a mutual fund. The later has far less of an economic impact.

My favorite paragraph is this:

It’s true that we do spend a lot more than the average family. Yet the one truly expensive line item in our budget is our airplane (which, by the way, was manufactured in France by Dassault Aviation SA), and those annual costs are mostly for fuel (from the Middle East). It’s just crazy to believe that any of this is more beneficial to our economy than hiring more teachers or police officers or investing in our infrastructure.

That's an excellent counter-example of trickle-down economics.

Do rich people use more road, parks or any public facilities more than the average person? In fact they use less. Is they any other reason than a rich person makes more money so should pay more taxes. In that context rich should also pay more at restaurants and for all other things that will also help the economy.

They worked hard to create the wealth and jobs in the ventures they created. Any one disagreeing that entrepreneurs means wealthy for this article do not create jobs, I have a question for them, does government create jobs?

The problem I have with this article, and any discussion that simply involves "the rich" is that it doesn't distinguish between the true innovators (to be trite, the Steve Jobs' of the world) and the (much larger) financializers, who truly do not generate any wealth, but rather suck productive and innovative capacity dry.

Steve Jobs gave us plenty even if he had never paid a dime in taxes.

Hank Paulson ate arbitrage for decades, then bailed out the banks after exactly the policies he advocated for collapsed on themselves, and should be in jail.

If you don't distinguish between these two types of rich, you are being stupid.

Great article. Being an Economics major in my previous life I always suspected that Supply-side economics was kind of bullshit. This just nails it - "When businesspeople take credit for creating jobs, it is like squirrels taking credit for creating evolution. In fact, it’s the other way around."

Taking the opposite stance:

"The annual earnings of people like me are hundreds, if not thousands, of times greater than those of the average American, but we don’t buy hundreds or thousands of times more stuff. My family owns three cars, not 3,000."

Nor does your family impose 3,000 times the burden on the economy either (which might necessitate a greater income tax), or drive 3,000 times the average (which might necessitate a greater road tax) or what have you.

Needless to say, I disagree with the premise of progressive taxation, but it is of course a complicated subject, so I'm always willing to hear more on the matter.

It's all true, but it's sad that people only listen if a rich person is talking.