The Wealthy as Job Creators?

[Texsox]

I’ve been thinking about our economy especially about the rich, those people who have amassed the most wealth. When Andrew Carnegie was building his fortune, his companies employed hundreds of thousands of employees. To become wealthier, the technology of the day required that he hire more and more people. Compare that to current companies that have similar value, they employ tens of thousands of employees.

 

We’ve moved from an economic system that required a huge output of labor and many employees to a system where you can become incredibly wealthy with a great idea and few employees. Yet, we keep cutting the tax rate on the wealthiest Americans because they are “the job creators”. In fact it seems that the path to incredible wealth is actually to use less employees, or at the minimum cheaper employees.

 

It seems like we should have been increasing tax rates on the wealthy instead of decreasing. The rates should have been low a hundred years ago and have been rising while cutting rates on the working class.

 

[Y2HH]

I’ve been thinking about our economy especially about the rich, those people who have amassed the most wealth. When Andrew Carnegie was building his fortune, his companies employed hundreds of thousands of employees. To become wealthier, the technology of the day required that he hire more and more people. Compare that to current companies that have similar value, they employ tens of thousands of employees.

 

We’ve moved from an economic system that required a huge output of labor and many employees to a system where you can become incredibly wealthy with a great idea and few employees. Yet, we keep cutting the tax rate on the wealthiest Americans because they are “the job creators”. In fact it seems that the path to incredible wealth is actually to use less employees, or at the minimum cheaper employees.

 

It seems like we should have been increasing tax rates on the wealthy instead of decreasing. The rates should have been low a hundred years ago and have been rising while cutting rates on the working class.

 

Tax rates just did increase on the wealthy.

[Jenksismyhero]

Carnegie also bought up every business he worked with in order to maintain his monopoly. Nowadays you hire different firms for different specialties. Microsoft employs ~100k people (almost twice as many as 8 years ago, sorta of debunking your theory right there) and I bet they outsource a whole lot more than that.

[Texsox]

Tumblr sold for 1.2 Billion had about 20,000 employees. A billion dollar plus business in 1913 would have needed 5x that. We are reaping the promise of technology. Employees are much more efficient today that even a generation ago. Just think about all the secretaries and book keepers that have been eliminated.

[Texsox]

http://en.wikipedia.org/wiki/Income_tax_in_the_United_States

 

In my lifetime the top bracket has gone from mid 70% range to sub 40%. The results have been wealth has moved from the middle class to the rich.

[Jenksismyhero]

Tumblr sold for 1.2 Billion had about 20,000 employees. A billion dollar plus business in 1913 would have needed 5x that. We are reaping the promise of technology. Employees are much more efficient today that even a generation ago. Just think about all the secretaries and book keepers that have been eliminated.

 

Sure, but how many tech related jobs have been created to make/implement/maintain that technology? I'm sure it's not 1 to 1, but it's not like we're only employing 10% of people these days because of technology.

[Y2HH]

http://en.wikipedia.org/wiki/Income_tax_in_the_United_States

 

In my lifetime the top bracket has gone from mid 70% range to sub 40%. The results have been wealth has moved from the middle class to the rich.

 

Have these top brackets ever actually paid anywhere near that, though?

 

We often cite these historically high tax rates on the ultra rich, but I'm guessing none of them paid anywhere near that even during those times.

[Balta1701]

Have these top brackets ever actually paid anywhere near that, though?

 

We often cite these historically high tax rates on the ultra rich, but I'm guessing none of them paid anywhere near that even during those times.

Similarly though, many wealthy people can pay much lower rates right now. If you'll recall the example tax return of the last presidential election, Mitt Romney paid a 10% tax rate and he only did so because he didn't claim a couple deductions he could have claimed in the released version. (Now that he's no longer running for office he likely will submit a modified tax return for this year, bringing his total federal tax rate down to around 8%, which I note is less than I pay since the Payroll Tax hits me much harder than it hits him).

[EvilMonkey]

So you eliminate loopholes that allow people to pay much lower than they should. Many people on both sides of the aisle wold go for that. But there is no reason anyone should ever have to pay more than half what they make to the government, no matter how much they make.

[Texsox]

So you eliminate loopholes that allow people to pay much lower than they should. Many people on both sides of the aisle wold go for that. But there is no reason anyone should ever have to pay more than half what they make to the government, no matter how much they make.

 

By loopholes, do you mean deductiions?

[Balta1701]

So you eliminate loopholes that allow people to pay much lower than they should. Many people on both sides of the aisle wold go for that. But there is no reason anyone should ever have to pay more than half what they make to the government, no matter how much they make.

We keep claiming that this is the case but it really isn't. This is the problem of asymmetrical interest.

 

I may think it would be a great idea to eliminate a tax deduction that costs the government $10 billion annually for no real economic benefit, but someone is getting that $10 billion per year. That someone cares a lot more about that subsidy than I do about getting rid of it.

 

I'm never going to come up with $50 million to lobby on behalf of getting rid of a billion dollar subsidy, but the people getting that subsidy will happily come up with $100 million a year to lobby for keeping it because the return on that investment is enormous.

 

That's why the talk of "tax reform" keeps getting stymied. The people who get those deductions make a fortune on them, the people who would get rid of them would like to get rid of them but they're not going to put up any money to do so.

[Texsox]

Or let me use another example, Steve Jobs

 

100 years ago, the jobs he created would have been solely in the US and benefitting US workers and the local areas they lived and worked. Now he created jobs in the US, but many more in other countries. yes, he was a job creator, but not nearly the extent that Carnegie was. And that isn't a complaint against Jobs, just the reality of today's world.

[southsider2k5]

Or let me use another example, Steve Jobs

 

100 years ago, the jobs he created would have been solely in the US and benefitting US workers and the local areas they lived and worked. Now he created jobs in the US, but many more in other countries. yes, he was a job creator, but not nearly the extent that Carnegie was. And that isn't a complaint against Jobs, just the reality of today's world.

 

The hole in your logic is that Sam Walton has created millions and millions of more jobs than Carnegie, Rockefeller, Rothschild, or anyone else of that era.

[Texsox]

The hole in your logic is that Sam Walton has created millions and millions of more jobs than Carnegie, Rockefeller, Rothschild, or anyone else of that era.

 

Actually. that may add to my point. Walton has added millions of low paying jobs that families cannot live on while driving local companies out of business. Finally, to achieve "always low prices" they are sourcing more and more products overseas. Walton's success was not a win-win for himself and the US.

[LittleHurt05]

So you eliminate loopholes that allow people to pay much lower than they should. Many people on both sides of the aisle wold go for that. But there is no reason anyone should ever have to pay more than half what they make to the government, no matter how much they make.

 

I depend on those "loopholes".

[southsider2k5]

Actually. that may add to my point. Walton has added millions of low paying jobs that families cannot live on while driving local companies out of business. Finally, to achieve "always low prices" they are sourcing more and more products overseas. Walton's success was not a win-win for himself and the US.

 

Wait, John Rockefeller never drove anyone out of business?

[Jenksismyhero]

And he provided his laborers enough wages to make a "living?"

 

Again, this gets back to my statement about what a living wage is - is it enough to survive, or is it enough to live a middle class, 2 story home with a picket fence, multiple cars, vacations, etc.

[EvilMonkey]

And he provided his laborers enough wages to make a "living?"

 

Again, this gets back to my statement about what a living wage is - is it enough to survive, or is it enough to live a middle class, 2 story home with a picket fence, multiple cars, vacations, etc.

Go to McDonalds and see how many workers have smartphones.

[Texsox]

Build a budget on $10 per hour jobs. $20,000 per year. $1,666 per month gross. Knock off a couple hundred for taxes, social security, etc and you are looking at $1,400. Can you survive? You see some people with smartphones, but they are probably living at home with someone who is paying their rent, etc.

 

Are those jobs really as good as the factory jobs of 115 years ago?

[Texsox]

Just so I am clear, Jenks, Alpha, and SS2k5 all believe McJobs and working at Walmart are the examples of job creation we should slash taxes to get.

 

Would Walmart or McDonalds try to get by with less staff if the owner's taxes were higher? What if it meant that the middle class would be paying less taxes and spending that money at McD and WalMart?

 

 

[southsider2k5]

Just so I am clear, Jenks, Alpha, and SS2k5 all believe McJobs and working at Walmart are the examples of job creation we should slash taxes to get.

 

Would Walmart or McDonalds try to get by with less staff if the owner's taxes were higher? What if it meant that the middle class would be paying less taxes and spending that money at McD and WalMart?

 

Nice spin.

[Balta1701]

Or let me use another example, Steve Jobs

 

100 years ago, the jobs he created would have been solely in the US and benefitting US workers and the local areas they lived and worked. Now he created jobs in the US, but many more in other countries. yes, he was a job creator, but not nearly the extent that Carnegie was. And that isn't a complaint against Jobs, just the reality of today's world.

One really interesting point is that by the standards of modern business leaders...Jobs's time at Apple was an abject failure.

 

It made him a millionaire but the money he got from apple was pretty small compared to what he got from Pixar. Selling Pixar is what made him a multi-billionaire, Apple money was a small piece of the pie for him that really didn't pay off at all.

 

Jobs created Jobs for tons of people at the place that he didn't rake in a fortune from.

[Jenksismyhero]

Just so I am clear, Jenks, Alpha, and SS2k5 all believe McJobs and working at Walmart are the examples of job creation we should slash taxes to get.

 

Would Walmart or McDonalds try to get by with less staff if the owner's taxes were higher? What if it meant that the middle class would be paying less taxes and spending that money at McD and WalMart?

 

I'm not really saying that. I'm arguing that those jobs are still jobs that provide an individual an income to live off of. It's not the ideal amount of money, but it's not ideal work. If you work in fast food or retail as a cashier/stocker (i.e., non-management) you shouldn't be expected to make a "middle class wage" because that job does not require those kinds of skills. I'm also arguing that those types of jobs are really no different than laborer level jobs from 80 years ago.

 

And i've really never said anything about slashing taxes. I'd be fine if the rich were taxed more and loopholes were closed. Same with corporations. I WOULD slash taxes for companies that keep jobs here at home instead of outsourcing them. The more incentive to do that, the better.

[Jenksismyhero]

One really interesting point is that by the standards of modern business leaders...Jobs's time at Apple was an abject failure.

 

It made him a millionaire but the money he got from apple was pretty small compared to what he got from Pixar. Selling Pixar is what made him a multi-billionaire, Apple money was a small piece of the pie for him that really didn't pay off at all.

 

Jobs created Jobs for tons of people at the place that he didn't rake in a fortune from.

 

His perks were still pretty nice at Apple, like getting a private jet and having his traveling expenses covered:

 

http://www.redmondpie.com/steve-jobs-annua...ess-than-yours/

 

Let's also remember Apple wasn't nearly the company it is today until about 10 years ago.

[Balta1701]

His perks were still pretty nice at Apple, like getting a private jet and having his traveling expenses covered:

 

http://www.redmondpie.com/steve-jobs-annua...ess-than-yours/

 

Let's also remember Apple wasn't nearly the company it is today until about 10 years ago.

Absolutely true. However, the benefits of the transformation of Apple into a behemoth...didn't go to Steve Jobs. He drew a good salary with benefits yes, but he made probably 50 times more money at Pixar than he ever made at apple, give or take a factor of 2.