Reinvesting In The Middle Class

National Journal writes up Nick Hanauer and his crusade for taxing the ultra wealthy folks like himself:

Like a lot of self-made rich guys, Hanauer has developed a theory on how to fix the ailing economy. He preaches it in op-ed columns, television interviews, political gatherings, and casual conversations with Seattle’s innovation royalty. He was invited to give a speech this spring by the organizers of TED, the nonprofit that has grown famous for commissioning “TED talks” on such diverse topics as the nature of innovation, the science of global warming, and the need to spread contraceptives throughout the developing world. Hanauer’s pitch took five minutes at the TED University conference on March 1. Afterward, organizers seemed keen to post it on their website. Then in May, they abruptly told him his remarks were too controversial, too political for TED, and wouldn’t be published online.
The disqualifying notion at the center of Hanauer’s talk was that the innovators and businessmen are not, in fact, “job creators”—that the fate of the economy rests instead in the hands of the middle class. So Hanauer wants to tax rich guys like himself more, to pay for investments to nurture middle-class families.
“We’ve had it backward for the last 30 years,” Hanauer said at the TED conference. “Rich businesspeople like me don’t create jobs. Rather, they are a consequence of an ecosystemic feedback loop animated by middle-class consumers.” When the middle class thrives, he said, “businesses grow and hire, and owners profit.”
Emerging research from high-powered experts across the ideological spectrum backs that economic inversion. Their work shows how America’s long-term prosperity is in jeopardy because the middle class is struggling and the super-rich are pulling away.
Widening income inequality helped drive us into the Great Recession and is holding back our recovery. It is tempting to view the stagnation of the middle class and the disappearance of middle-skill jobs as a problem for only some of us. That’s simply untrue. Mounting economic evidence  suggests strongly that Hanauer’s argument is correct and is, in fact, fundamental to America’s future. It’s not a do-good argument. It is a selfish one, both for innovators and for every other American counting on the innovator class to power growth for decades to come.
The evidence suggests that the United States needs a vibrant middle class. Not for any of sentimental reasons, but because it’s a very dangerous thing not to have.
As Hanauer is discovering, that’s not something many American elites want to hear.

The article focuses on Hanauer, his glamorous lifestyle and his position that middle class people need to be able to purchase consumer goods to make "job creators" rich.  He pushes for higher taxes on the wealthy, but we also need to see an increase in the share of productivity which goes to labor versus capital.  The article notes that no single businessman is going to raise the wages of his workers and have any real impact on the wider economy unless all other workers are also getting raises.  Unfortunately, the Bush tax cuts, Romney's tax plan, and the Ryan budget all give special consideration for investment income versus earned income.  As Hanauer notes, he pays an effective tax rate of 11%.   Most middle class families pay as much or more as a share of their income, and they have jobs they have to go to.  That doesn't make any sense.