Tuesday, September 4, 2012

Labor Day Without Jobs: Exposing the "Job Creator" Fraud

Labor Day Without Jobs: Exposing the "Job Creator" Fraud

by Paul Buchheit

Published on Monday, September 3, 2012 by Common Dreams


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


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


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


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

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