It would be neat to identify about 25 Americans, women and men, who are in the top one percent by income (say, over $250,000 per year), but who gained their wealth by starting new industries or businesses that employ 100 people or more. These Americans would be vivid examples, in whose light to pose a question to Democratic candidates like Kerry and Edwards: Do you want to raise taxes on such people, so that they no longer have an incentive to create new jobs?
If not they, who will create new jobs?
1. Note the difference between people who merely have money –Kennedy, Edwards, Heinz-Kerry with his six-million-dollar house, for instance–and people who invent, start new industries, create new jobs. There is an important difference between mere idle wealth and the living habit of enterprise. Tax incentives are aimed at turning the former into the latter. That is, at inciting the rich to become active in creating new jobs. TAX CUTS FOR THE ENTERPRISING CREATE JOBS.
2. The problem with the Clinton recession is that it was his policies that slowly killed incentives. Government surpluses meant that the government was overcharging taxpayers. Thus, job losses started under Clinton, and it’s taken time to reverse the flow by changing incentives.
3. Tax cuts for the enterprising offer incentives for launching new industries and new jobs, and thus are the best practical help for the American people, of every station. Tax cuts for the enterprising do not hurt the middle class or the poor. A dynamic economy thrusts the whole nation forward, just as recession and stagnation drag it down.
4. The sources of a growing economy are twofold: the fire of the creative spirit and a splash of incentives. The latter (to allude to Abraham Lincoln’s phrase) throws the fuel of interest on the fire of invention.
5. The choice for Democrats is between being the party of envy, which wants to punish the rich, even if that leads the country into stagnation, and becoming the party of dynamism and incentives and hope and opportunity. Those good things come from cutting taxes at the top, to ignite the talents of the enterprising and to spread the investing class like wildfire.
6. Raising taxes at the top leads to stagnation. Lowering tax rates at the top leads to dynamism. One must be careful to judge just where the ignition point is.
7. That difference is the difference between creating new jobs and steadily losing jobs.
8. Nowadays, both Democrats and Republicans agree about cutting taxes for the middle class and the poor. That’s a big step forward. But now the argument is about cutting taxes at the top. And the big distinction to keep in mind is the difference between merely having wealth and being ignited to invest it in new inventions, new industries, new ventures, new companies.
–Michael Novak is the winner of the 1994 Templeton Prize for progress in religion and the George Frederick Jewett Scholar in Religion, Philosophy, and Public Policy at the American Enterprise Institute. Novak’s own website is www.michaelnovak.net.