Just because TED regards the topic as too political, however, doesn’t mean Hanauer’s points aren’t valid. Income inequality has skyrocketed over the last three decades, as the richest Americans have seen their incomes rise and their tax rates fall. Middle class wages, meanwhile, haven’t kept up with costs or productivity. That led Hanauer to conclude that the middle class is the real engine of job growth, and that “we’ve had it backward for the last 30 years” by cutting taxes on the rich, according to his prepared remarks:
If it were true that lower tax rates and more wealth for the wealthy would lead to more job creation, then today we would be drowning in jobs. And yet unemployment and under-employment is at record highs. […]
We’ve had it backward for the last 30 years. Rich businesspeople like me don’t create jobs. Rather they are a consequence of an eco-systemic feedback loop animated by middle-class consumers, and when they thrive, businesses grow and hire, and owners profit. That’s why taxing the rich to pay for investments that benefit all is a great deal for both the middle class and the rich.
While conservatives say tax cuts for the rich will encourage job growth, facts tell the opposite story. The years following the Bush tax cuts were the worst for job creation since the government began keeping records, and those policies “fostered the weakest jobs and income growth in more than six decades” and “sluggish business investment and weak gross domestic product growth.”
Job growth over the post-war period, meanwhile, has been stronger when the top income tax rate was higher. “If you ranked each year since 1950 by overall job growth, the top five years would all boast marginal tax rates at 70 percent or higher,” Michael Linden, the director of tax and budget policy at the Center for American Progress, wrote last year.
Hanauer’s speech may be “too hot for TED,” but that doesn’t mean it isn’t true.
*Hanauer has been working on tax and inequality issues with the Center for American Progress.