American venture capitalist Nick Hanaeur gave a TED talk March 1 saying that the wealthy don't create jobs, customers and commerce do. TED has so far withheld the video from the public, citing potential controversy, but his idea is correct, and TED should air Hanauer's talk.
Wealthy individuals and businesses don't care about creating jobs for jobs' sake. Hanaeur correctly states that jobs are created by customers and commerce. Businesses will hire only as a last resort, which is why hiring is slow right now. There are too few customers and too little commerce.
Hanauer says that "our current policies are so upside down. When you have a tax system in which most of the exemptions and the lowest rates benefit the richest, all in the name of job creation, all that happens is that the rich get richer."
Hanaeur assumes that government requires all the funds it has, does the right thing with them, and isn't making the rich richer. It is making the rich richer through a variety of means. Raising taxes on the wealthy in the absence of any steps to reduce federal debt will simply move their funds into a deferred income and lower-overall tax rate.
Right now, 40 cents of every dollar spent at the federal level is borrowed. Few who discuss the federal deficit address interest payments, which totaled $454 billion in 2011. That's nearly as much as is spent on education by all federal, state, and local governments combined each year.
More than half of the payments on the U.S. debt go to someone, somewhere else, in places like Switzerland, Taiwan, the Caribbean, Japan, and of course, China. Rich people there and investors here all vacuum up American taxpayer dollars, and they're not "creating jobs."
Will Smith's face said it all when he was informed by a French television interviewer that new French president Francois Hollande would raise income taxes to 75% on the nation's wealthiest citizens. If I had a choice, I'd rather have Will Smith keep some of his money instead of sending it without reason to a Swiss banker or Taiwanese investor.
Foreign investors and American speculators are earning money even at low government security yields, and will earn much more with a higher debt and higher interest rates that are certain to come. It's time to change the conversation about taxes and debt.