Does anybody in Washington really want to solve our nation’s problems, or does everybody actually prefer partisan gridlock to their Constitutional duties?
I have this idea for a tax plan that I believe would solve many economic problems. Perhaps somebody can find something inherently wrong with my plan, and it just won’t work. However, I have published versions of this for several groups of readers, and I am still waiting for somebody to tell me what is wrong with it.
My plan is based on the premise that, instead of arguing over which party’s theories will create the best incentives for improving the economy, why not simply put the incentives that everybody says they want right into the tax law itself? Write the tax code change in such a way that the incentives are actually spelled out. This is not designed as a partisan issue that is either left or right; it just takes the issue out of the realm of theory, and clarifies what the incentives are.
At first glance, this may appear to be radical in the sense that it contains something that many on the left are saying would be totally unacceptable, and something that many on the right are saying would be totally unacceptable. It also may appear to be overly simple at first glance. But look at the bullets for what this will do. It is designed, with the incentives actually spelled out, to accomplish what each side says they want in a tax law. The only thing that I see as “radical” in this plan is the removal of partisan theories to justify a specific tax law.
Here is my basic plan, and it is not complicated or filled with legal language:
Make one change to the tax code: Change the corporate tax rate to zero. A zero rate on corporate taxes, but with an important stipulation: the zero rate will only apply to net income up to the amount of payroll expense for U.S. based, non-executive personnel. For net income above that amount, a normal corporate tax rate will be applicable.
I believe this simple change to the tax code will work wonders for the economy, both short term and long term. I have it worded so that the zero tax bracket for corporations applies to 100% of domestic, non-executive payroll expenses. Perhaps studies will show that 100% is not the best percentage to use. Perhaps 50%, or even 150%, or whatever will work better. The main point of my idea is that corporate taxes be based on a percentage of such expenses. The entire idea should not be scrapped if the only thing found wrong with it is the use of 100%, instead of some other percentage, as the cut-off point for corporate taxes.
This plan would…
This plan would require a carefully worded definition of what constitutes “non-executive” employee compensation. Otherwise, it could be defeated with widespread use of loopholes.
I have no delusions that such a plan will win universal approval. I am just saying that, with the help of public discussions, I believe that it can gain enough of a consensus to be workable. There is a portion of the population that will oppose any workable plan.
This will not satisfy those whose goal is to “starve the beast”, since it does not reduce government revenue. But it does increase private industry production and the domestic economy. Let the public see the pluses and see how the political debate goes.
If this plan received a commitment to long term stability, instead of frequent changes, it would eliminate much uncertainty in the economy, thus increasing business and consumer confidence. Stability means that the same plan would be in place in times like now, with high unemployment, but also in times when the economy might be overheated. For those situations, other policies can be put into place to go along with this plan. There would be no need for changing this plan if unemployment is no longer a problem. If you want to see a little more detail of my plan, click here.
But back to the question that I asked at the beginning. “Does anybody in Washington really want to solve our nation’s problems, or does everybody actually prefer partisan gridlock to their Constitutional duties?” I mentioned that I have published versions of this plan to various audiences, and haven’t had anybody point out anything that would make it non-workable or do more harm than good. One of these audiences: I have sent the basic plan to both Senators from my home state (one Republican, one Democrat) and to the Senate’s chief tax writer (a Democrat). I tried to send it to the House’s chief tax writer as well (a Republican), but his website doesn’t accept correspondence from people outside of his district. Out of these, not one has responded to my correspondence. No positive or negative comments, they just did not respond at all. Could it be that they found it unworkable? Perhaps, but they didn’t respond and say so.
It makes me wonder if both sides simply want to maintain the atmosphere of partisan gridlock.
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