By Wayne Allyn Root, Former Libertarian Vice Presidential Nominee
Last week I wrote a commentary entitled, “What Would Reagan Do?” My recommendation was to emulate President Ronald Reagan’s courage and chutzpah. Do something bold, courageous, and radical to turn today’s economic Armageddon into an economic boom. That Reaganesque idea is a One-Year Income Tax Vacation — allowing every taxpayer in America to keep 100 percent of their income for one year.
What would they do with it? Some would spend it, creating a boom in consumer spending, stock, and real estate purchases. Many would start new businesses or expand current ones, creating millions of jobs. That bold tax plan is aimed squarely at the only group that can lead us out of this Obama Great Depression — private sector innovators, risk-takers and small business investors. It is Reagan on steroids.
But that is only a start. Here are nine synergistic ideas to build upon that Income Tax Vacation:
1. Welcome taxpayers back from the income tax vacation with a Flat Tax, emulating the most successful economy in the world — Hong Kong (which has an unemployment rate of 3.5 percent) and a dozen former communist countries.
You mean Obama doesn’t believe America can compete with Russia (13 percent flat tax), Romania (16 percent flat), Albania (10 percent flat), Lithuania (15 percent flat), Serbia (12 percent flat), or Bulgaria (10 percent flat)? Why can’t America try a tax plan that is creative, motivational, and Reaganesque? Why not a flat tax that actually rewards success and hard work?
Why not a Reverse Flat Tax with two simple rates that could be filled out on a postcard: A 15 percent flat tax rate for the first $250,000 of income, and 10 percent for any income above $250,000? Imagine the economic explosion this would inspire, as capitalist entrepreneurs line up to invest their money in new businesses, so they could take advantage of this Reverse Flat Tax. Contrast that reaction with Obama’s tax schemes, which merely frighten, discourage, and punish small business owners.
2. Offer investors a “Small Business Start-Up Tax Credit.” More than two out of every three jobs are created by small business, almost 100 percent of which are from start-ups. We can get small business moving again and creating jobs by giving investors dollar-for-dollar tax credits up to $100,000 for investments in IPO’s, secondary offerings, startups, and new real estate developments.
3. Offer a “Get Small Business Moving Again” employment plan. Suspend all payroll taxes and minimum wage rules for any new employees hired by a small business (200 employees or less) in the next year. This suspension of taxes and minimum wages lasts for a minimum of 3 years, or until unemployment drops below eight percent. That will get America’s restaurants and other small businesses hiring youth again. There’s no “slave labor” here. If you don’t want the job with a lower wage, don’t take it. It’s your right to stay unemployed. My bet is that millions of youth will line up, scream with joy for the opportunity, and say THANK YOU!
4. Personally, I’d recommend following the Hong Kong model of zero capital gains tax…forever. But let’s compromise and keep capital gains taxes at 15 percent for any investments made during the next five years, enabling business owners and investors to invest with certainty, stability, and consistency.
5. In return for that compromise, let’s agree to eliminate all capital gains taxes for Americans Age 55 and older. Why not reward, motivate and encourage those Americans with income and assets from a lifetime of hard work, to invest in small business, stocks, and real estate…thereby empowering their prosperity in retirement, and creating an economic explosion that rewards their children and grandchildren?
6. Allow U.S. companies to bring their foreign earnings back to America with a very low tax or penalty (5%). Companies would rush to take advantage, thereby creating millions of new jobs from an infusion of as much as $2 trillion dollars pumped into our economy.
7. Resolve the Social Security crisis, thereby ending fear and uncertainty. It can be done instantly, simply, and without raising taxes for anyone. Simply raise the retirement age in stages over the next 20 years to age 68, then 69, and finally 70. This change won’t affect anyone nearing retirement age now.
Combine this age raise with a partial privatization of Social Security for younger workers. This gives younger Americans ownership of their retirement accounts. They can use it, or pay for their grandchildren’s college education. Upon death, it belongs to their family.
8. Cut the corporate tax rate from 35 percent (currently second highest in industrialized world) to a flat 15 percent…but simultaneously eliminate all corporate welfare. We should support free market capitalism — not a crony capitalist government that awards favors, subsidies, and sweetheart deals to the biggest campaign contributors.
9. End the Federal Reserve. This unaccountable quasi-government, quasi-private organization has damaged the U.S. economy for far too long. Its mandate is to protect the value of the dollar. Since the Fed’s founding in 1913, the dollar has lost 94 percent of its value. I’d call that a disaster. It’s time to implement a sound dollar policy by restoring the Gold Standard.
In the movie “A Few Good Men” Jack Nicholson said to Tom Cruise, “The truth? You couldn’t handle the truth!” Would Obama and his socialist cabal support letting rich people get richer if it saved the U.S. economy, created prosperity, and led to 20 million new jobs? Sadly, I fear they couldn’t handle the truth.
Wayne Allyn Root is a former libertarian vice presidential nominee. He now serves as chairman of the Libertarian NationalCongressional Committee. He is the best-selling author of “The Conscience of a Libertarian: Empowering the Citizen Revolution with God, Guns, Gold & Tax Cuts.” His website: ROOTforAmerica.com