Labor Day Without Jobs: Exposing the "Job Creator" Fraud
by Paul Buchheit
Published on Monday, September 3, 2012 by Common Dreams
http://www.commondreams.org/view/2012/09/03
With cunning and contempt and catechismal fervor the
super-rich have argued that all money should move to
the top, where it will be used to stimulate the economy
and create jobs. But they ignore the facts that prove
them wrong. And it doesn't take much to prove them
wrong.
1. First, a look at the success of the super-rich:
Money has quickly moved to the top
Based on IRS figures, the richest 1% nearly tripled its
share of America's after-tax income from 1980 to 2006.
That's an extra trillion dollars a year. Then, in the
first year after the 2008 recession, they took 93% of
all the new income.
Wealth is even more skewed. The richest 10% own 83% of
financial wealth, which they've skillfully arranged to
be taxed at just 15%, ostensibly because they pump that
money back into job-creating ventures. More on that
misconception later.
Conservatives claim that wealth inequality has remained
steady for the richest Americans. But data from Edward
Wolff shows that the excess wealth was simply
redistributed among the rest of the top 5%, who saw
their share of America's net worth increase by 18
percent from 1983 to 2007. It was also noted by Sam
Pizzigati that much of the top-level wealth was socked
away tax-free overseas, a fact largely confirmed by a
Tax Justice Network study.
2. Corporations are just as successful: profits have
doubled, taxes cut in half
While corporate profits have doubled to $1.9 trillion
in less than ten years, the corporate income tax rate,
which for thirty years hovered around the 20-25% level,
suddenly dropped to 10% after the recession. The
biggest firms basically said "We're not paying."
That's a half-trillion dollars a year unpaid by the
very companies who have successfully convinced much of
America that their tax rates are too high.
The tax they actually pay is very low relative to other
countries. U.S. corporations paid a smaller rate of
income taxes than all but two of the OECD countries
analyzed by the Office of Management and Budget and the
Census Bureau. A Treasury report agreed, noting that
the Tax/GDP rate for U.S. companies was 35% lower than
the OECD average from 2000 to 2005.
Corporations even pay less than low-wage American
workers. On their 2011 profits of $1.97 trillion,
corporations paid $181 billion in federal income taxes
(9%) and $40 billion in state income taxes (2%), for a
total income tax burden of 11%. The poorest 20% of
American citizens pay 17.4% in federal, state, and
local taxes.
3. Some Non-Job-Creation Facts
The Wall Street Journal noted in 2009 that the Bush tax
cuts led to the "worst track record for jobs in
recorded history." 25 million people remain unemployed
or underemployed, with 30 to 50 percent of recent
college graduates in one of those categories. Among
unemployed workers, nearly 43 percent have been without
a job for six months or longer.
For the jobs that remain, most are low-paying, with the
only real employment growth occurring in retail sales
and food preparation. A recent report by the National
Employment Law Project confirms that lower-wage
occupations (up to about $14 per hour) accounted for 21
percent of recession losses and 58 percent of recovery
growth, while mid-wage occupations (between $14 and $21
per hour) accounted for 60 percent of recession losses
and only 22 percent of recovery growth.
The minimum wage is shamefully low, about 30% lower
than the inflation-adjusted 1968 figure. And the tiny
pay can't be blamed on small business. Two-thirds of
America's low-wage workers, according to another
National Employment Law Project report, work for
companies that have at least 100 employees.
All these job woes persist while productivity has
continued to grow, with an 80% increase since 1973 as
median worker pay has stagnated.
4. So what are the "job creators" doing with all their
money?
Over 90% of the assets owned by millionaires are held
in a combination of low-risk investments (bonds and
cash), the stock market, and real estate. Business
startup costs made up less than 1% of the investments
of high net worth individuals in North America in 2011.
Perhaps, instead, they're building businesses on their
own? No. Only 3 percent of the CEOs, upper management,
and financial professionals were entrepreneurs in 2005,
even though they made up about 60 percent of the
richest .1% of Americans. A recent study found that
less than 1 percent of all entrepreneurs came from very
rich or very poor backgrounds. They come from the
middle class.
That deserves repeating. Entrepreneurs come from the
middle class.
Not surprisingly, then, since the middle class has been
depleted by the steady accumulation of wealth at the
top, the number of entrepreneurs per capita has
decreased 53% since 1977, and the number of
self-employed Americans has decreased 20% since 1991.
5. Big business is even worse at job creation
First of all, the cash holdings for non-financial U.S.
firms increased to $1.24 trillion in 2011, with about
57 percent of it stashed overseas. Commerce Department
figures show that U.S. companies cut their work forces
by 2.9 million from 2000 to 2009 while increasing
overseas employment by 2.4 million.
The top holders of cash, including Apple and Google and
Intel and Coca Cola and Chevron, are also spending
their money on stock buybacks (which increase stock
option prices), dividends to investors, and subsidiary
acquisitions. According to Bloomberg, share
repurchasing is at one of its highest levels in 25
years.
6. The Big Fraud: Tax us less, and the jobs will come
Despite their unwillingness to invest in jobs, and even
in the face of damning evidence against their tax
myths, the super-rich fight like wildcats at any
suggestion that they support the country that provided
their wealth. Way back in 1984, right after the Reagan
tax cuts, the U.S. Treasury Department came to the
obvious but belated conclusion that tax cuts cause a
loss of revenue. A 2006 Treasury Department study found
that extending the Bush tax cuts would have no
beneficial effect on the U.S. economy. Other sources
have confirmed that economic growth was fastest in
years with relatively high top marginal tax rates.
Ample evidence exists to show that no relationship
exists between the capital gains tax rate and
investment. As noted in the Washington Post, "The top
tax rate on investment income has bounced up and down
over the past 80 years - from as high as 39.9 percent
in 1977 to just 15 percent today - yet investment just
appears to grow with the cycle, seemingly unaffected."
In fact, the low rate may even have a negative effect
on growth. A Congressional Research Service report
states: "Capital gains tax rate increases appear to
increase public saving and may have little or no effect
on private saving. Consequently, capital gains tax
increases likely have a positive overall impact on
national saving and investment."
7. So what becomes of the jobs?
Corporations are hoarding over a trillion dollars. The
richest 1% take a trillion dollars a year more than
productivity-based earnings since 1980. Over eight
trillion untaxed dollars is being hidden overseas.
That's a present value of ten trillion misdirected
dollars. Just 1/10 of that would create 25 million
jobs, one for every unemployed or underemployed worker
in America. Or a $45,000 a year job for every college
student in the United States.
But the people who call themselves "job creators" do
nothing to make that happen.
Paul Buchheit is a college teacher, an active member of
US Uncut Chicago, founder and developer of social
justice and educational websites (UsAgainstGreed.org,
PayUpNow.org, RappingHistory.org), and the editor and
main author of "American Wars: Illusions and Realities"
(Clarity Press). He can be reached at
paul@UsAgainstGreed.org. more Paul Buchheit
Article printed from www.CommonDreams.org Source URL:
http://www.commondreams.org/view/2012/09/03
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment