Tax but no tax

I watched the Bill Maher show the other day and one of his guests was a Republican congressman, believe it or not. The conversation got around taxing the rich more and changing the capital gains tax rate. The Congressman defended the idea that taxing the rich would cost jobs and implied that by letting the rich keep more of their money, more jobs would be created.

I guess on the surface it may sound OK except there is no way to prove it. The idea is that if wealthy individuals with lots of money in stocks and mutual funds get to keep more of the gains they then will somehow put that money into more stocks and mutual funds and thereby, it is alleged, create more opportunities for jobs.

For example Mitt Romney, in 2010, earned $21.6 million on his investments. This was both in capital gains and dividends. This was taxed at the 15% tax rate versus a top rate of 35%. So does that extra money that Romney now saves and gets to keep, go back and help create jobs? Certainly he is investing in various companies and mutual funds and that makes more money available to those companies but there is no way of knowing if those companies will create jobs, or just pay of debt, or plow it back into R&D, or put into cash for later. If the money Romney saved went to Uncle Sam, which Republicans don’t want, where would it go? Maybe help pay down our debt, or fund social programs (don’t say that!), or put it in a pot to be given to Congress to dole around the country on pet projects. Heard of earmarks?

This is another example of how Republicans love to seize on an issue and milk it for all it’s worth. It sounds good if you only hear 10 seconds of what they say and Republicans figure that’s all the attention span Americans have for many issues. Maybe they’re right! Think about it.