Are the rich really job creators? Why Boehner's argument falls short | Economy | -- Your State. Your News.

Jul 08th
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Are the rich really job creators? Why Boehner's argument falls short

moneylogo040411_optBY ROBERT KINKEAD 

John Boehner, Speaker of the House, is quoted in the Huffington Post (HP) as saying that higher tax rates on upper-income Americans would slow job growth.  Why does nonsense like this always go unchallenged?

For years now, Republicans and so-called Tea Party people have been insisting that if we raise income taxes on the wealthy they, in turn, will stop creating jobs. They would have us believe that a wealthy CEO who gets a sizable increase in his personal taxes is going to start limiting the growth of the company he or she directs. Balderdash!

Or, take the case of the noble small business owner, who we are told, employs more than half the people who work in the private sector.  Remember, even the most radical, liberal tax increasers have proposed raising taxes only on incomes exceeding $250,000.  So, the GOP would have us believe that a small business owner making, say, $300,000 a year profit would begin to lay off his or her employees if taxes were increased by $10,000 and they wound up only clearing $290,000.  How likely is that?

According to Forbes Magazine, the average annual income of the top 1 percent of the population is $717,000, compared to the average income of the rest of the population, which is around $51,000. The real disparity between the classes isn’t in income, however, but in net value: the 1 percent average worth is about $8.4 million, or 70 times the worth of the average American.

HP indicates that the 1 percent might be walloped with a tax increase of as much as $121,000 if America falls over the fiscal cliff next year, while Mr. Average might get hit for about $2,000.  And this is the real problem: a 4 percent increase for Mr. Average and a 16 percent increase for the wealthy.  Mr. Average can’t really afford it and the wealthy feel they would be getting gouged.

Here’s what the Federal income tax brackets are expected to look like in 2012:


Filing Jointly


10% Bracket

$0 – $17,400

$0 – $8,700

15% Bracket

$17,400 – $70,700

$8,700 – $35,350

25% Bracket

$70,700 – $142,700

$35,350 – $85,650

28% Bracket

$142,700 – $217,450

$85,650 – $178,650

33% Bracket

$217,450 – $388,350

$178,650 – $388,350

35% Bracket

Over $388,350

Over $388,350

What a lot of people don’t realize is that those filing jointly, making more than $388,350 do not pay 35% on their entire income.  They pay 10% on the first $17,400, 15% on the next $53,300, 25% on the next $72,000, 28% on the next $74,750, 33% on the next $170,900, and 35% on anything over $388,350 for an effective tax rate of about 25%.

The real rub, however, is that due to special treatment of qualified dividends and other types of remuneration, the wealthy,
as Warren Buffet has pointed out, actually only pay about 15% of their total
income, same as Mr. Average.

In truth, the only jobs that would be lost if taxes on the wealthy are raised next year are the cushy political positions of the
Republicans who doggedly promised no tax increases for the rich.


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