Extend Bush-era Tax Cuts--Government Doesn’t Need The Funds - Page 2
Superficially, it appears that all government’s tax revenues come from two sources: businesses and individuals. However, individuals’ incomes come from businesses, so all taxes flow out of businesses directly and indirectly.
Businesses are the productive jobs’ creators in the economy. If government taxed businesses’ distributed profits, but not their retained profits, businesses would have more funds to reinvest. This should be a key plank of government's job-creation focus. Businesses’ alternatives in this system would be either to retain profits tax-free for growth, or pay dividends, net of taxes, as they do with employees’ compensation.
People say that my proposal would encourage businesses to pay executives excessively with retained profits. So? Executives would pay taxes on their excessive compensations. I suggest that all business tax gimmicks, benefits, and write offs, would be eliminated. The proposal is simple: businesses would pay no taxes on retained profits, and file no tax returns. It would withhold taxes when it paid salaries, commissions, and bonuses to individuals, including executives, and when it paid dividends to shareholders. Government would then have to cut its tax departments substantially as it simplified its tax code.
For individuals, there would be three tax brackets: 0, 7.5 and 15%. How would government replace lost funds? Government would have to shrink. It is time to reverse government’s expanded role in the economy. Let’s look realistically at government’s role. Certainly, we must look after weaker folks in society, but we need to reject victim, and system-abusive behaviors. As well, we must have proper checks and balances in the market economy, but we must let the market select winners and losers.
Public-sector unions will oppose this proposal and will fight for the status quo so bureaucrats continue to use tax dollars loosely. Government must be prepared for a long hard fight. Ronald Reagan and Margaret Thatcher made bold moves; Scott Walker, too.
We cannot continue with the present government Ponzi scheme of using tomorrow’s tax dollars to pay yesterday’s spending. Later, society will pay. Have we looked at England and Greece lately? Is France the next intensive care patient? With current archaic budget principles and policies, and existing entitlement programs, the USA’s economy will collapse. When? Stay tuned.