Will taxes on the wealthy create less jobs?

Did you know — better, would you have guessed? — that the top income-tax rate in India, which is the home of breast-fed socialism, is a mere 30 percent? That is down from 60 percent in 1979. How does that compare? Well, in the United Kingdom it is down from 83 percent in 1979 to 40 percent today; in the United States, from 70 to 35. In all three cases, it has been cut roughly in half.





But not all the economic news is good, and we hear, especially from upward-bound Democratic leaders, about the loss of manufacturing jobs for American workers. This is attributable, of course, to a variety of causes, some entirely bad (lax immigration laws), others good in themselves though with bad side effects (free trade, the decline in the power of the labor unions). The most alluring comparisons would be with Japan and Germany, which have the reputation of carrying their solicitude toward the domestic working classes to extraordinary lengths.





In fact, in the last dozen or so years (1992-2005), U.S. manufacturing jobs have dropped by 20 percent. In Japan and Germany the drop in such jobs is comparable. Alan Reynolds, in his masterly study Income and Wealth, unpacks some of the assumptions. "Anxiety about deindustrialization or downsizing is usually linked to international trade through catch-words like 'globalization' or 'offshoring,'" Reynolds writes. "The United States is widely imagined to have 'exported jobs' to countries that export more than they import, such as Japan and Germany, even though manufacturing employment declined even more dramatically in those countries where overall job growth has been abysmal."








How to cope with all the thunder about U.S. trade policies? Since Japan and Germany have run chronic trade surpluses for many years, Reynolds notes, statistics showing greater loss of manufacturing jobs in those countries than in the U.S. "contradict all trade-related explanations for the (unproven) belief the United States has long been suffering wage stagnation or increasing wage inequality."





It is illuminating to learn that wage-earners in manufacturing in the United States take in less, sometimes far less, than wage-earners in other spheres. Those who work in utilities take in on average $27 per hour; in education, $17; in manufacturing, $16.





U.S. manufacturing jobs have been lost through automation, but this is so in every major industrial economy. The question to ask is: Have those who have lost employment on that account found jobs elsewhere? The answer is that yes, it is so in the United States, where a large number of those who have lost their jobs in manufacturing have moved to higher-skilled, higher-paying jobs in service industries. "As we discovered with the 'vanishing middle class,'" Reynolds points out, "a rising percentage of American families left the middle class manufacturing jobs by moving up."


"Income and Wealth" (published by Greenwood Press) is stunning in its revelations and its deflations of popular Democratic superstitions. On page 203, for example, Reynolds lists the most popular superstitions of the derogating class, including the assertions that 80 percent to 90 percent of U.S. households have experienced no increase in real income for 25 years, and that only the top 1 percent to 10 percent have received any significant benefits from the growth of productivity.





"Not one of those statements is even remotely close to being true," Reynolds writes. "It is difficult to imagine how so many of the nation's leading economic journalists and economists claim to believe not just one or two of these incredible ideas, but the entire package."





Reynolds, a senior fellow at the Cato Institute, is an economist of acute precision. For years he has defended the capitalist way of doing things, and this volume is a high tribute to his championship of basic American ideas.

Will taxes on the wealthy create less jobs?
Yeah, take money from the ones paying people their salaries and see how long they tolerate losing their shirts financially for no good reason but to feed the PORK SPENDERS.
Reply:Nobody I know thinks we are exporting jobs to Japan or Germany. Anyone with a brain knows we are exporting jobs to low wage countries like China India etc. We are now exporting "knowledge" and service type jobs overseas to India and China -- and most service jobs pay less than manufacturing. He faills to include retail and other low paying service jobs in his analysis.





Reynold's focus on Japan and Germany just shows he is not a "masterful" economist and only calls into question the rest of his assertions.





PS It's "fewer" jobs, not "less" jobs. William F. Buckley would never make that mistake, althougth you did cut and paste the rest of his op ed.
Reply:Grammatically the question should be, 'Will taxes on the wealthy create 'fewer' jobs'? I suspect that 'lower' taxes would be part of the equation as well. The answer is yes, and no. It depends. When there's slake in production, lowering taxes tends to put more cash into the private sector, which creates a larger pool of investment money and according to Keynes this will encourage investment as interest is lowered and will result in later increased production of scarce goods and produce an increase in job opportunity for those who work in these expanded industries. So far, so good. To soak up this initial production, often the federal government begins to buy up goods as well....more basic John Manyard Keynes. But here comes the 'no'! World production is now at 100%, the problem for the US is that it isn't here in the states. Lowering taxes now for the 'rich' means more hot money going into corporate instruments which allow corporations to buy out their rivals to increase 'market share', not to increase production. The result here is to reduce middle managment jobs, increase corporate profits and in the end, the 'rich' actually do get richer. Government revenues may rise moderately for a time, but not enough to stop government borrowing...so the debt rises...etc....I wish I had space to go on because the results of tax cuts are not predictable...unless you know the economic universe those cuts occur in! it ain't as simple as the 'conservatives' believe.
Reply:thats what the republicans want us to believe. Gee I wonder why? lol
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