Does Raising Taxes on The Rich Create Jobs?

Yes, it does. A hypothetical situation:

Rich business owner makes $10 million a year selling widgets. He is happy, since his goal was to get to $10 million a year. Taxes on his income level are 90%, so his after-tax income is left at $1 million a year.

However, since only net income is taxed for a proprietorship of this nature, he can re-invest $5 million in his company without paying taxes on it and his after-tax income will be $500,000 that year (which is still more than enough to be very comfortable).

But, he has now also invested $5 million into the growth of his company, rather than giving it to the mean, nasty government, so his widget company has expanded to include a better supply chain, higher sales, and best of all more employees!

Following this plan, he is able to increase his gross earnings over the next 10 years to the point that he has grown enough to make $100 million a year, leaving himself with $10 million after taxes. It’s the same amount he would have had incentive to make if there were no taxes, plus he’s created a lot of extra jobs by re-investing and growing his company.

Of course, the caveat is that the model only works when people are capable of saying “I have enough money.”  If there are a bunch of wanna-be Gordon Gekkos out there saying “greed is good” and “I can never have too much,”  well, what’s the saying about the love of money?  Something about roots…

It’s food for thought.

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3 responses to “Does Raising Taxes on The Rich Create Jobs?

  1. I can only shake my head. How are you or anyone else gonna tell him what he needs to be “comfortable” ?

    Would you please define greed for me because people who define it always seem to make the definition beholden to their own biases of how much should be enough.

    • I think “comfortable” and “enough” would best be defined as having the ability to keep an above-average standard of living, without ever having to work again. Yes, that definition does reflect my bias regarding what is “enough.” Just as your own bias determines your opinions. Just as anyone’s bias inevitably affects their own definition of abstract ideas. As far as defining greed; it’s a lot like pornography. I can’t necessarily define it, but I know it when I see it.

    • Moreover; while I may not presume to know what any individual considers “confortable” in his or her own mind, I most certainly have a firm grip on being able to determine whether or not someone is a greedy, selfish asshole.

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