Myths and millionaires
As every good businessman knows — including Gov. Romney, with whom I had been associated as a limited partner at Bain Capital Ventures — the soundness of a company and its ability to create jobs does not rest on lower taxes or tax avoidance, for the company or its senior management.
If Gov. Romney and Congressional Republicans continue to insist on renewing the special Bush tax cuts that go only to the wealthiest 2 percent of Americans like me, it will do nothing to create jobs. It is a fiction, pure and simple, that taxing so-called “job creators” will have an adverse effect on the economy.
Just the reverse is true. Instead of spending nearly $1 trillion on tax cuts to make millionaires even richer, those tax dollars can be used more constructively to retain teachers, police officers and firefighters and repair roads and bridges. These are all essential services that will rebuild our economy and maintain a civil society. In addition, these tax dollars will contribute to deficit reduction.
The son of a Lithuanian immigrant to this land of now diminishing equal opportunity, I had the good fortune to start a small company that enjoyed a measure of success that was eventually acquired by The Stride Rite Corp. Twelve months later I was asked to become president of Stride Rite.
Throughout the last 10 years of my tenure, the company’s return on investment was in the top 1 percent of all companies listed on the New York Stock Exchange. We created thousands of new jobs. By the time I left, we had over 5,000 employees. Our success rested on the quality of the product and service provided to consumers. It was a reflection on the quality of the workforce as well as the management. My success could not have been possible without the people, who we continued to hire and train as we grew. I depended on them as much as they depended upon me.
In the years we were creating so many jobs, my federal income taxes on the top slice of my income were sometimes as high as 70 percent. But these rates never discouraged me or anyone else from hiring workers or growing a company. Today we’re paying about half that on the top portion of salaries and fees, and a meager 15 percent on the big chunk of our income that comes from investments. That’s why Gov. Romney and I and many other millionaires pay a lower income tax rate than many working American families.
Many millionaires never create any jobs at all. Those who do will create them regardless of the tax rate, and certainly won’t be dissuaded by the small increase of about 5 percentage points the president has proposed. The myth of millionaires as job creators being turned off by higher taxes is the creation of some members of the U.S. House of Representatives and U.S. Senate who are funded by these same millionaires. They know little about what makes companies successful. Romney knows better. It is a matter of record that during the time tax rates, both corporate and personal, were so much higher our economy was booming. Conversely, the slowest job growth since World War II took place between the Bush tax cuts for millionaires and the 2008 economic meltdown.
A few months ago, every Republican in the House and Senate, along with 19 House Democrats and two Senate Democrats, voted against a bill ending the Bush tax breaks for the richest 2 percent, but extend them for 98 percent of Americans and 97 percent of small businesses. I hope they will take a fresh look at the facts. That’s why I joined with over 100 other millionaires in signing a Voices for Progress letter to all members of Congress, appealing to them not to renew these tax breaks.
Allowing the wealthiest 2 percent to withhold tax dollars robs children of health and education. It is not only immoral, it is bad economics. They are the future of our country, which has begun to fall behind our competitors. It is also destroying the American dream, which brought my father to this country alone at the age of 15. Both he and the founding fathers would agree that the future of this nation should not be compromised by the shortsightedness of those so well off in the present. These are not the values that made this country great.
Arnold Hiatt was the CEO of The Stride Rite Corporation. This column previously appeared in The Boston Globe.
