Support the Real Job Creators

Republicans have drawn a line in the sand when it comes to increasing taxes on the rich. Such taxes, they argue, would only worsen the economy because jobs are created by the investments made the richest Americans. Singling out these job creators for increased tax burdens, they say, would only worsen the American economic situation.
I’m all for creating jobs. God knows we need to do so with unemployment running over nine percent. If the richest one percent were the job creating class than by all means leave them along. However, this is just not the case.
Jobs are created when businesses can no longer fill their orders with the workers they have on hand. By this logic, the government needs to go easy on those segments of the population most likely to place orders – i.e. buy stuff – while taxing those who are holding on their incomes – saving the monies - rather than spending it on investment, goods and services.
Republicans assert that rich Americans are more likely to invest and that investment by the rich creates more jobs in the long run than the same amount of consumption by the lower and middle classes. Many economists dispute this point, but let’s assume that it could be true. If so, than the Republican’s new shorthand for the richest Americans – “job creators” – may be more than a glittering generality.
Suppose, however, that the extra income provided to the rich by keeping a lid on their taxes and special benefits do not increase investment in plant and equipment. If that is the case than – in the interest of lowering unemployment – shouldn’t we be increasing the taxes on rich and lowering them on those lower income groups who will immediately use their extra income to buy stuff and thus create jobs?
Fortunately, data exists to shed light on this conundrum. If the rich were creating jobs by investing in plant and equipment - either personally or via the corporations whose stock they have purchased – we would see increased levels of investment. If, instead, they were holding on to their monies, it would show up in corporate profit taking. (Simply put a corporation either invests its earnings or takes a profit.)

Corporate profits hit record levels in 2010.
Nonresidential fixed investment – where the rich job creators would work their magic either directly or via the corporations they jointly own – has yet to recover to 2006 levels.
At the end of the day, investment decisions by the firms and rich entrepreneurs are based on consumer demand and not on the amount of savings provided to the rich by virtue of lower tax rates. Consumer demand is based, in turn, by the amount of monies in the pockets of the lower and middle income Americans. It is these Americans, not the very rich, who are the true job creators.