Wednesday, July 30, 2014

What Rich People Don't Understand

I'm going to assume it's a lack of understanding, because I find it difficult to fathom what other possible reason the rich could have to recommend taxing the rich.

This TED talk is a good example.   Everything he says sounds really good.  In some respects, he is correct - the rich don't create jobs, that's done mostly by small business and the middle class.  Where they always go WRONG and I mean Horribly WRONG is in two areas.

First - It's not the Rich spending - it's their access to CAPITAL that makes job creation possible. It's making capital available to entrepreneurs that makes jobs.

The second is that Transferring that capital to the government in ANY form will change anything.  It won't. Government creates jobs, but those jobs are fed by taxes of the middle class,  all that happens when government creates jobs is and increased tax burden.    What about all those government employee's paying taxes?   - They're paying it with YOUR tax money.   They PRODUCE nothing.  Can they increase private sector spending in the short run - Yes, but with out adding anything to the GDP there is NO growth.  Ultimately you simply increase the tax burden and put it on even fewer people.    That's what's been happing for the last 20 years - see the big improvement?  No?  Surprise!

If the rich really want to give away their money out of guilt and have it do some good - create interest free small business loans  - not big business, SMALL business.  Big business has access to capital they always have and until things collapse they always will.   It's small business that's being strangled by taxation and regulation - as is the middle class.   Stop taxing the crap out of us to buy votes.

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