The one percent richest Americans are drowning in money. Corporate earnings are at a fifty year high. The fortune 500 saw an increase in their 2011 profits 16 percent higher than in 2010. The top one percent took 93 percent of all US income growth for the last two years, leaving the 99 percent with 7 percent of that growth. So why aren’t the rest of us drowning in jobs if giving more money to the rich creates jobs?
The answer, of course, is that tax cuts for the rich destroy jobs; they do not create them. Look at the world around you.
Unemployment hovers at a seventy year high of around 15 percent if you used the same methodology as was used during the Great Depression. People are simply giving up looking for work. Job growth is the weakest in history despite record government deficits. If fact, job growth for the last twelve years are the weakest on record.
Here is how tax cuts for the rich destroy jobs. When a tax cut is given, CEO’s bid against other CEO’s to get the rich to invest their newly available extra cash in their stocks and bonds. The best way to do that is to raise profits, but in any economy, especially a stagnant one like today’s, that’s difficult to do unless one engages in shipping and creating jobs overseas. Then the difference between the old wages and the new, between the wages here and over there, become profits and enhanced dividends, and this fuels a rise in share prices. All of which makes any company doing this a nice investment opportunity for the one percent. That’s one of the reasons why the Fortune 500 experienced an average 16 percent increase in profits from 2010 to 2011.
There are other ways CEO’s managed to do this, like conspiring to raise prices that the 99 percent paid. First they needed to buy off the government. This way the government looks the other way rather than enforces any laws in “restraint of trade.” But by and large, the free trade treaties are the biggest redistribution tool the rich have to siphon off more income from the 99 percent and stick it in their already fat wallets.
Tax cuts for the rich are destroying the economy, wiping out the middle class, providing incentives for corporations to ship our jobs, tax bases and school funding overseas to be redistributed to the one percent. That’s why the economy is so stagnant despite record federal deficit spending intended to spur job growth. The deficit is creating jobs at only a slightly faster rate than thirty years of tax cuts for the rich are destroying jobs.
The best way to stop the madness is to enact a high tax on the biggest incomes, a progressive tax. This is what the best and the brightest government officials knew all throughout the Great Depression, and they acted on this knowledge for the greater good.