…The Republican theology about taxes would have you believe there are no Mark Zuckerbergs because of high taxes. You’ll hear them often say, “We cannot punish the job creators.” If the wealthy pay higher taxes, they wont invest in new businesses that create new jobs. Instead of using their money to build and expand, that money will go to a wasteful government that won’t do anybody any good. This sort of thinking dominates policymaking in Washington and New York, and also has managed to get accepted by large sections of the public at large. “I never got a job from a poor man,” they note. It is as if higher taxes will make people like Mr. Zuckerberg suddenly give up on their ambitions and head straight to the soup kitchen, taking all of his employees down with him.
I wonder what sort of businessmen operate like this. Mr. Zuckerberg, for example, in 2004 was staring at a top marginal tax rate of 35 percent, the Bush rate. It seems to me he considered paying that rate of tax would be worth the cost of earning himself almost $7 billion. Does anyone really believe he would not have founded Facebook if the tax rate was 39.6 percent, the Clinton rate? Is that extra 4.6 percent such a huge obstacle to success, that Mr. Zuckerberg would have decided Facebook and its prospects weren’t worth the effort? How about Bill Gates of Microsoft staring at a top rate of 70 percent in 1979? Or perhaps Gordon Moore of Intel starting out with a top rate of 75 percent in 1968? Why did Bill Hewlett and Dave Packard start HP in a garage in 1939 with a top rate of 79 percent and then take the company public in 1957, during which time the top rate rose to 91 percent? 91 percent!
The fact is the idea that tax rates have anything to do with business creation is a myth. Nobody who has a great idea and good prospects is going to not go for it because of tax rates. Even if the tax rate was 100 percent over annual income of $1 billion, it isn’t going to stop someone who has some moxie for going for that $1 billion a year. Lets face it, a billion dollars is a good living. Furthermore, it has almost nothing to do with job creation. American Express surveyed small business this year and found only 18 percent cared about high taxes. Only 8 percent were worried about the federal deficit. When asked “Which of the following would most incent you to hire,” 67 percent of small businesses said more consumer demand or better economic outlook. Only 11 percent said tax credit.
The only people who think that tax rates are keeping them from success are, quite frankly, losers and cowards. Joe the Plumber comes to mind…