Tuesday, May 29, 2012

Are the super-rich REALLY job creators? No.

Republicans argue that taxes on the super-rich should be kept low or even made lower because the rich are, they say, the true job creators.  Republicans don’t really offer any evidence for this claim for a good reason.  There isn’t any.  As it turns out, wealthy individuals rarely invest much of their wealth in job creation.

Paul Buchheit at Common Dreams summarized the facts about the investment habits of the super-rich in a recent post. 

Marketwatch estimates that over 90% of the assets owned by millionaires are held in a combination of low-risk investments (bonds and cash), the stock market, and real estate. According to economist Richard Wolff, about half of the assets of the richest 1% are held in unincorporated business equity (personal business accounts). The Wall Street Journal notes that over three-quarters of individuals worth over $20 million are invested in hedge funds.

Angel investing (capital provided by affluent individuals for business start-ups) accounted for less than 1% of the investable assets of high net worth individuals in North America in 2011.

The Mendelsohn Affluent Survey confirmed that the very rich spend less than two percent of their money on new business startups. The last thing most of them want, apparently, is the risky business of hiring people for new innovation...

CEOs, upper management, and financial professionals made up about 60 percent of the richest 1% of Americans in 2005. Only 3 percent were entrepreneurs…

In fact, the very rich may not care about U.S. jobs in any form. Surveys reveal that 60 percent of investors worth $25 million or more are investing up to a third of their total assets overseas. Back home, the extra wealth created by the Bush tax cuts led to "worst track record" for jobs in recorded history. The true American job creator, as venture capitalist Nick Hanauer would agree, is the middle-class consumer.

Read Buchheit’s complete post here: http://www.commondreams.org/view/2012/05/29-1

Bottom Line: If we really want to help the job creators, we should stop worrying about the marginal tax rate paid by the top 1%.  We should focus on LOWERING the tax burden of the middle class.  And, we should be INVESTING heavily in education, infrastructure, and other programs to expand the middle class and make upward mobility once again a reality for those at the lower end of the income scale. 

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