There is a story told about Henry Ford. He was walking with a union organizer at the Ford plant in Dearborn, Michigan. Henry, proudly, pointed to one of his Model T Fords, and said, “let’s see you organize that”. The union man replied, “let’s see you sell it a car”. True story? I have no idea, but it does illustrate an interesting point.
The Republicans claim that high taxes on the job creators makes job creation almost impossible. This is pure nonsense. Suppose you are the inventor of the new iWidget. Now, you are in your mid-twenties and there seems to be such of a demand for it that it is beginning to look as if you might be able to retire by the age of 30. This is great. People want your iWidget no matter how much you are charging for it.
In fact, they want it so much that you are going to have to build more factories, and hire people to make the iWidgets. Hire people? Hmmm. Along with hiring people comes labor problems, all sorts of new taxes, paid holidays, time and ½, etc. Do you really want to hire more people? Do you really want to build more factories? Well, no. Paying salaries cost money, building factories cost more money, etc. Unfortunately, you have no choice. It costs money to make money.
Along with your quickly accumulating wealth, you decide to pay more attention to politics. Like most Americans, you don’t feel that you should be giving any money to the government. But wait, you are smart enough to realize that you got your education at the University of Northern SouthEastern Central, a tax supported school, the roads to get to the school were pretty good, you had a government loan, you went to a good high school. This is all paid by tax money. Well, you get the idea.
The truth is, that with all the money you are earning, if some were taken away, you would probably never notice (remember John McCain didn’t know how many houses he had, Mitt Romney had no idea how much he was worth). You are very rich and becoming richer. Now, how about the people who are buying your iWidget. They are not so rich. What happens if taxes are raised on them? Well, they would have to cut back and, since your iWidget is a luxury, they won’t buy it.
So, what is the lesson from this? Well, if your taxes are raised a bit, you will still be able to retire at 30. If the middle class taxes are raised? You might never retire because there will be no one to buy your iWidget.
Remember, the most productive time in American history was after World War II and into the 1950s. At that time, the marginal tax rate on the super rich was 90%! Just about every American, at that time, thought that they were a part of the great American middle class. A one income earner was quite enough. Mama stayed home and raised the kids.
People rarely want to hire other people. They hire because there is no other choice. The people who force you to hire workers are the middle class who want your product. If they DON’T want your product, then you won’t have to hire anyone. You won’t have to build new factories — and you won’t retire at 30, either.
From the time of President Reagan our representatives have done a magnificent job of destroying the American middle class by cutting the tax rates on the “job creators”. So, where are the jobs that the Republicans keep promising? Don’t hold your breath.