In the war of rhetoric that has developed in Washington as both sides blame each other for our economic mess, one argument has been repeated so often that many people now regard it as fact:
Rich people create the jobs.
Specifically, entrepreneurs and investors, when incented by low taxes, build companies and create millions of jobs.
And these entrepreneurs and investors, therefore, the argument goes, can solve our nation's huge unemployment problem — if only we cut taxes and regulations so they can be incented to build more companies and create more jobs.
In other words, by even considering raising taxes on "the 1%," we are considering destroying the very mechanism that makes our economy the strongest and biggest in the world: The incentive for entrepreneurs and investors to build companies in the hope of getting rich and, in the process, creating millions of jobs.
Now, there have long been many problems with this argument starting with
- Taxes on rich people (capital gains and income)