[tiereenny]

Think Progress: http://thinkprogress.org/economy/201...to-job-growth/

Congressional Republicans — during both last year’s debate over the pending expiration of the Bush tax cuts and the current negotiations regarding raising the nation’s debt ceiling — refused to consider tax increases on even the very richest Americans. In fact, House Majority Leader Eric Cantor (R-VA) blew up debt ceiling negotiations last week due to his insistence that those making more than $500,000 annually be shielded from any tax increase.

The GOP justification for its position — even with income inequality at its worst level since the 1920s — is that raising taxes on the rich will destroy jobs. “What some are suggesting is that we take this money from people who would invest in our economy and create jobs and give it to the government. The fact is you can’t tax the very people that we expect to invest in the economy and create jobs,” said Speaker of the House John Boehner (R-OH).

However, history doesn’t back up the GOP’s claim. In fact, as Center for American Progress Director of Tax and Budget Policy Michael Linden found, “in the past 60 years, job growth has actually been greater in years when the top income tax rate was much higher than it is now”:For instance, in years when the top marginal rate was more than 90 percent, the average annual growth in total payroll employment was 2 percent. In years when the top marginal rate was 35 percent or less — which it is now — employment grew by an average of just 0.4 percent.

And there’s no cherry-picking here. Pick any threshold. When the marginal tax rate was 50 percent or above, annual employment growth averaged 2.3 percent, and when the rate was under 50, growth was half that.

In fact, if you ranked each year since 1950 by overall job growth, the top five years would all boast marginal tax rates at 70 percent or higher. The top 10 years would share marginal tax rates at 50 percent or higher. The two worst years, on the other hand, were 2008 and 2009, when the top marginal tax rate was 35 percent. In the 13 years that the top marginal tax rate has been at its current level or lower, only one year even cracks the top 20 in overall job creation.

Contrary to Republican claims, lower taxes on the rich don’t lead to higher economic growth either.

[Prealiitellg]

So Richard what would the job growth rate been in 2008 and 2009 been if the top marginal rate been over 90%? What would the job growth rate have been in 1999 if the rate had been 28%? What would the job growth rate have been in 1957 if the top rate had been 35%?

Do you see a possible fallacy in the methodology used here?

BTW I would like to see the actual yearly numbers.

[Nfvzjvcl]

The point is that the two are unrelated. The GOP talking point that lower taxes for the wealthy somehow translates into job growth has no statistical basis in fact.

[Z3s9vQZj]

Statistically the only way to determine the relationship between job growth and the tax rate is if the tax rate was the only variable. Therefore you cannot make the claim they are unrelated.

That said; under which scenario would a small business owner be more likely to grow his business and therefore be more able to create jobs. One in which the government confiscates 20% of his income or one that confiscates 70%?

[poonnassunlix]

One in which middle class wages increase, stimulating purchase power. The growth engine has always been consumer demand for products. That drives the economy.

[Franchise]

OK, so under which tax rate scenario would an increase in a middle class wage be more, likely?

[AAAESLLESO]

Here's one answer, along with more data pointing in the direction that the wealthy are not the ones hurting and don't need more help.

CNN: http://money.cnn.com/2011/02/16/news...lass/index.htm

Incomes for 90% of Americans have been stuck in neutral, and it's not just because of the Great Recession. Middle-class incomes have been stagnant for at least a generation, while the wealthiest tier has surged ahead at lighting speed.

In 1988, the income of an average American taxpayer was $33,400, adjusted for inflation. Fast forward 20 years, and not much had changed: The average income was still just $33,000 in 2008, according to IRS data.

Meanwhile, the richest 1% of Americans -- those making $380,000 or more -- have seen their incomes grow 33% over the last 20 years, leaving average Americans in the dust. (How the rich became the über rich)
...

One major pull on the working man was the decline of unions and other labor protections, said Bill Rodgers, a former chief economist for the Labor Department, now a professor at Rutgers University.

Because of deals struck through collective bargaining, union workers have traditionally earned 15% to 20% more than their non-union counterparts, Rodgers said.

But union membership has declined rapidly over the past 30 years. In 1983, union workers made up about 20% of the workforce. In 2010, they represented less than 12%.

Without collective bargaining pushing up wages, especially for blue-collar work -- average incomes have stagnated.

[preptarra]

Couldn't one argue, Richard, that higher wages in certain sectors of the United States opened up opportunities for companies here to take advantage of lower wages in other countries to produce goods, thus creating a loss of jobs here (and the the resulting loss of those union members) that has continued, particularly in manufacturing and assembly? Moreover, free trade agreements and rising demand in other countries has made it more profitable in many instances for certain industries to move entire operations to those countries. After all, the objective of a corporation is to return a profit for its shareholders. Today's market is global. Our workforce is either financially competitive in certain markets or it isn't.

[hablyShappY]

That's a good point, but manufacturing migration to maintain domestic profit is also a contributor to wage stagnation and as a result, suppression of demand for local services. But it's also worth noting that in many of the sectors that have migrated to overseas workforces as a result of collective bargaining agreements, the trigger was generally not wages but retirement packages. GM's problems were almost completely based in pension obligations, as are many of the municipal and state budgets that are underwater today.

If the 401(k) was in place instead of pension plans for the past 50 years and wages held strong as a result of collective bargaining, the budgetary riptide tied to pensions today largely would not exist.

In a foreseeable future where pensions are swapped into 401(k) plans, health care at reasonable prices is available on exchanges and collective bargaining agreements are primarily focused on wage levels, the budgetary riptide attached to pensions could evaporate completely. In its place would likely be stronger wage levels, healthier local economies and a generally more prosperous middle class. It can't keep crises like the tech or housing bubbles from happening, but with higher wage levels come things like increased savings and less risky mortgage choices, so this type of scenario can indeed mitigate some of the damage.