The Republicans in the U.S. Congress are not coming out of the "fiscal cliff" negotiations looking very good. And rightly so, since they are willing to risk the economic health of the nation in a last-ditch effort to protect the wealthiest individuals in this country.
The Republicans claim to be doing this to protect the job creators. Let's be clear, the top 2% do not create jobs. As any first year finance student will tell you, the primary objective of a business is to create long-term wealth for its owners - not the creation of jobs. Jobs may result but given the choice the entrepreneur prefers a smaller to a larger headcount and lower rather than higher wages. Corporate raiders like Bain & Co. do not take over companies to create jobs they do it to make profits.
The claim that the 2% are the job creators is what, in the classroom, is called an assertion, but has been said so often that many in this country now take it to be a self-evident truth and ignore the sketchy evidence for the claim.
As we learned from candidate Romney, the wealthy park their wealth overseas in such as Switzerland or the Cayman Islands. No-one took the time to explain what lay behind this export of wealth and we have to draw our own conclusions. But we can assume it was not in order to create banking jobs in Switzerland. Nor did anyone help us make the connection between wealth diverted to the Cayman Islands with job creation in southeast Ohio.
Further, as candidate Romney illustrated, the wealthy receive much of their income in dividends and capital gains both of which currently receive preferential tax treatment such that candidate Romney had an average tax rate of around 14%. So, in fact, increasing the top tax bracket for the wealthy will not make much difference unless the special rates for dividends and capital gains are also increased. In a vague way lacking any specificity, the Republicans in Congress have spoken about closing "loopholes" and possibly these preferential tax rates are among their targets. But I don't think so.
Fraser G. MacHaffie