Thursday, July 08, 2010

The Republican Solution to the Deficit

Most economists are liberally biased and can't be trusted to stop the deficits which are crippling the country, but Arthur Laffer has the perfect solution:

Any government program that would reduce unemployment has to make working more attractive for both employer and employee. Since late 2007 the federal government has spent somewhere around $3.6 trillion to stimulate the economy. That is a lot of money.

My suggestion would have been to take all $3.6 trillion and declare a federal tax holiday for 18 months. No income tax, no corporate profits tax, no capital gains tax, no estate tax, no payroll tax (FICA) either employee or employer, no Medicare or Medicaid taxes, no federal excise taxes, no tariffs, no federal taxes at all, which would have reduced federal revenues by $2.4 trillion annually. Can you imagine where employment would be today? How does a 2.5% unemployment rate sound?
See? If business didn't have to pay taxes, they'd hire people again! That's what's been stopping 'em! Then, after 18 months all we have to do is fail to reinstate federal taxes and we can have low unemployment forever! And we won't have to burden our children with debt, because we'll have just given up on that stuff by then!

Naturally it wouldn't be a bed of roses. Much of the money that you personally spent on taxes would go to paying privately for things you used to rely on inefficient government for, like the troops, or monitoring food safety yourself, or road repair kits. And of course, rough frontier justice for anything the FBI used to handle. And terrorists. Gotta protect yourself from them.

By the way, check out this little tidbit at the end of the editorial:

Mr. Laffer is the chairman of Laffer Associates and co-author of "The End of Prosperity: How Higher Taxes Will Doom the Economy—If We Let It Happen" (Threshold, 2008).

Fortunately we DIDN'T raise taxes in 2008, which is why the economy performed so splendidly that year and in years since.

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