Does Targeting the Wealthy Kills Jobs? T.J. Rodgers Thinks It Does

Last updated on August 19, 2022

The Obama administration raised taxes for the rich with a reminder that they may be raised again. Targeting the rich sounds fair to many because they make more money than most, but does targeting the rich affect middle and lower-income groups?

Thurman John or T. J. Rodgers is the founder and chief executive officer of Cypress Semiconductor. He believes targeting the rich kills jobs that are mostly occupied by middle and lower-income groups. Rodgers explains in is article in The Wall Street Journal:

“Since 2000, the economy has staggered under the record government spending and deficits of two presidents, George W. Bush and Barack Obama. The result of that spending spree has been lower real wages and higher, more-persistent unemployment. The Federal Reserve has pushed interest rates to near-zero, and, for the first time ever in the U.S., that Depression-era medicine has not worked—a scary situation reminiscent of Japan’s decade-plus economic demise.

According to the latest 2012 IRS income-tax data, the top 1% of American taxpayers earned 20% of all income and paid 36% of all taxes. The top 5% earned 36% of all income and paid 58% of all taxes. Will even higher taxes help the economy? My experience in Silicon Valley tells me that high and so-called progressive taxes are a major cause of the country’s current economic problems, not the solution.”

High corporate taxes are being criticized for increasing tax evasion. Progressive taxation on private investment, according to Rodgers, will kill jobs. He quotes his experience. “. . . Cypress Semiconductor required huge investments to create jobs in its chip-manufacturing plants. Between 1983 and 2003, those investments totalled $797 million and led to the creation of 4,033 jobs at an investment of $198,000 per job created. Thus, my own experience on the cost of job creation ranges from $18,000 to $198,000 per job, compared with $500,000 to $4 million per job created by the Obama stimulus program.

This data squares with the broad numbers showing that private investment is more efficient than government spending in creating jobs. In other words: Every dollar that is taxed away from private investment and spent by government produces fewer jobs than the jobs destroyed by the loss of private investment.”

Rodgers believes the Obama administration must promote entrepreneurs and businesses, and not stall growth through increased taxation. Job creation is often quoted by businesses as their contribution to the economy, but it is also true that a company only generates as many jobs as it needs, and fires a large number of employees when needed. Keeping in mind all the characteristics of a business, policies must be made so that the tool and the goal are in harmony.