Americas richest entrepreneurs, investors, and companies now have so much money that they cant possibly spend it all. So instead of getting pumped back into the economy, thus creating revenue and wages, this cash just remains in investment accounts. Hanauer explains why. Hanauer takes home more than $10 million a year of income. On this income, he says, he pays an 11% tax rate. (Presumably, most of the income is dividends and long-term capital gains, which carry a tax rate of about 20%. And then he probably has some tax shelters that knock the rate down the rest of the way). With the more than $9 million a year Hanauer keeps, he buys lots of stuff. But, importantly, he doesnt buy as much stuff as would be bought if his $9 million were instead earned by 9,000 Americans each taking home an extra $1,000 a year. Why not? Because, despite Hanauers impressive lifestyle — his family owns a plane — most of the $9+ million just goes straight into the bank (where it either sits and earns interest or gets invested in companies that ultimately need strong demand to sell products and create jobs). For a specific example, Hanauer points out that his family owns 3 cars, not the 3,000 cars that might be bought if his $9+ million were taken home by a few thousand families. If that $9+ million had gone to 9,000 families instead of Hanauer, it would almost certainly have been pumped right back into the economy via consumption (i.e., demand). And, in so doing, it would have created more jobs. Hanauer estimates that, if most American families were taking home the same share of the national income that they were taking home 30 years ago, every family would have another $10,000 of disposable income to spend. That, Hanauer points out, would have a huge impact on demand — and, thereby job creation. So, if nothing else, its time we stopped perpetuating the fiction that rich people create the jobs. Rich people dont create the jobs. Our economy creates jobs. Were all in this together. And until we understand that, our economy is going to go nowhere. Read more: businessinsider/rich-people-create-jobs-2013-11#ixzz2mZMD1Qhj
Posted on: Thu, 05 Dec 2013 03:55:27 +0000
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