How to Keep More of Your Income While Creating Unemployment for Your Fellow Americans

[Boojatta]

Does the low tax on so-called "capital gains" create an incentive to transform employed Americans into unemployed Americans?

Suppose that shareholders are considering two candidates for CEO. The old CEO wants to continue to employ many Americans. The person who wants to replace the old CEO promises to increase dividends for shareholders by employing fewer Americans. This isn't a class issue. Mid-level managers will lose their jobs. Non-managers who do unskilled work and who have little education will lose their jobs. Highly educated non-managers who do skilled or professional work will lose their jobs. Non-managers who have a lot of education, but who are doing jobs that don't use their education will lose their jobs.

The work will be done in some other country, a country that doesn't provide much protection for employees or the environment, either in legislation or in reality. However, it's a country with lower wages, and the lower wages translate into lower costs, higher profits, and higher dividends.

The shareholders vote the old CEO out and the new person in. The new CEO receives stock options. The new CEO buys stock, and receives dividends associated with the stock. Then the new CEO fulfills the promises that were made. Americans lose their jobs, profits increase, and dividends increase. The shareholders receive higher dividends. The general investing public sees the higher dividends and is attracted to the stock. The stock price increases, benefiting the new CEO and the shareholders who voted for the new CEO. It seems that everybody wins.

What about the American employees who lost their jobs? Dividends are called "capital gains", but did higher dividends indicate that the company built up its human capital of American employees?

When capital gains are achieved by slashing jobs for Americans, why should those capital gains be taxed at a rate lower than what the CEO pays on his or her salary income? Wouldn't it be better to have an incentive to create jobs for Americans? Wouldn't it be better to at least have no incentive to put Americans out of work?