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Friday, December 31, 2010

An immoderate economic stimulus plan.

Which will never, ever, even be discussed by the 'moderates' and their political masters.

by StFerdIII

The term 'moderate' is an Orwellian piece of abused lettering. In modern nation states the 'moderates' of today would have been rightly characterized as 'socialist' twenty five years ago. The 'moderates' now defend the socialist status quo in most modern nations. Socialized markets, universal health 'care', unionized bureaucracies with bankrupting benefits and perquisites; the over-regulation of absolutely everything; and the protection of key markets including agriculture, telecoms, media, and auto manufacturing. The end result is lower wealth, offshoring, fewer jobs, an immature population, a decrepit military, cultural Marxism and the inanity of pop culture which keeps the masses opiated. Markets? You must be kidding. No free market exists anywhere in the world. Globalisation is tepid and far from eradicating national borders the increase in trade has actually allowed the nation state's political apparati unparalleled opportunities to increase its power and scope. Only in technology and finance can we posit that globalization in any form truly exists. Yet even with that caveat no person living in reality can possibly make the claim that the state is weaker today, than 10 years ago. Across the developed world governments own on average 45% of the total economy including the costs of regulation and coercion.

Trade, global integration and trans-national innovation are the keys to building healthy, wealthy, and robust societies able to take care of their 'poor', even though the definition of poor keeps changing to suit those actors who rely on government welfare, program spending or support. The poor today are certainly the richest poor in history. We need more globalisation, trade and offshoring, not less. If you want to increase manufacturing jobs you need to reduce all taxes, regulations, assorted fees, eco-nonsense, and labor laws which make it nigh impossible to fire someone. An immoderate plan, which could be implemented at the Federal level and which would generate more government revenues, and stimulate true private capital based jobs which is the only way to increase wealth and produce innovation is the following:

  1. Reduce the corporate tax rate to 0% [OECD average is 24%]. Capital is already taxed within the firm, you don't double tax the same dollar as it becomes net income.

  2. Reduce the payroll tax by half. This obviates the need for any 'stimulus' packages from the vote-buying socialist-political elite. It directly translates into gains for 'working people', which is a media obsession [though the great brains in the media usually equate highly paid union workers who earn 20% more than the average person in private industry with the 'working poor'.]

  3. Reduce capital gains and dividend taxes to 0. This will attract investment capital, and buttress stock markets which are in for another rollar coaster ride as the true economy, which is in bad shape, reasserts itself, and as the fiat-currency structure starting with the Euro, begins its inevitable collapse.

  4. Flat tax all personal income taxation at 10% for those with incomes above the poverty line. This simplifies the tax code and increases the capital available for personal consumption, savings and investment.

This immoderate plan is just common-sense. But common sense of course is the new definition of immoderate. In conjunction with the above tax reductions, you would cut spending – just the unnecessary profligacy in the beginning would suffice – by 25%. No sensible person can make the claim that government is efficient. Most corporations are inefficient. In the corporate world a truism is that about 30% of all budgets are wasted. The same must be true for government. By cutting 25% of our budgets we would 'pay' for the above tax decreases. At the same time, this stimulus to the real economy would create jobs and investment, and actually over time, improve the government's revenue position. Everyone would win.