Is taxing the rich taxing job creators?

Republicans are completely opposed to President Obama’s idea of raising the personal income tax rate by a few per cent on the richest 2% of Americans. Their argument against this idea is that it would be raising taxes on the job creators of America. They are concerned about increasing the tax rate on those earning $250,000 and up, even if it’s from the current 35% to the 39.6% that it was under President Clinton. They believe that it is those individuals that earn $250,000 and up that are the small and medium business owners which create the jobs for the economy.

It is true that small and medium business is the largest source of employment in the U.S. It may also be true that the owners of these businesses are many of the people that earn $250,000 and up. However, the Republicans have one serious flaw in their thinking on this issue. What we are talking about here is the PERSONAL income tax rate, NOT the CORPORATE tax rate. Most small and medium businesses cut a paycheck to the owner just like they do for the other employees. That means the business would not be affected by this tax rate, only the individual’s take home pay. This should not have any bearing on how the business performs and the hiring decisions it makes. It is not the owner’s take home pay that determines whether or not he/she will hire additional employees. If the business is seeing growth then the owner will look to hire, even if that owner is paying a little more in personal income tax.

The best proof that the Republican thinking on this issue is wrong is found in President Clinton’s time. During the Clinton Presidency, the U.S. added over 23 million jobs. This all occurred with a personal income tax rate of 39.6% on the richest Americans. Under George W. Bush, that rate slowly fell to 35% and only 3 million jobs were created. Not to mention the doubling of the debt from $5 trillion to $10 trillion, since he didn’t actually pay for this tax cut, nor did it result in increased growth for the economy.

Americans should realize that increasing the personal income rate on the richest 2% of Americans will not hurt the economy or the job market in any way. In fact, it will help because the national debt will go down and this will make investors less worried about the long term outlook of the U.S. Hopefully people will pressure their Republican representatives into doing the right thing and forgetting about the Bush tax cuts for the rich.