The Labor Department has reported that the unemployment rate is still stuck at 9.1 percent, which is one more indicator that this economy is still stuck in stalled. That may be a surprise to the administration, but it is not a surprise to those of us who understand that the business sector is the engine of economic growth.
Consistent with the economic guiding principles (EGPs) introduced in last week’s commentary, the following fuel for the engine of the economy makes sense.
EGP #1: Production must precede consumption
Pass a 25 percent maximum tax on corporate profits and personal income. We are the only nation on the planet that has not lowered its top corporate tax rate in the last 15 years. As a result, we are not as business-friendly as many other nations, and people wonder why jobs are leaving this country. Duh, taxes!
The 25 percent max tax on personal income will help fuel our economic engine because most medium-to-small businesses are sub-Chapter S corporations, which means that if they make a profit in their business it is considered ordinary income. Those profits would be taxed at a maximum of 35 percent, which reduces fuel for the economic engine.
I also propose not taxing foreign repatriated profits. Let those profits come back home without a tax penalty. Some of those profits just might end up in our economic engine right here at home. If we don’t drop the tax on repatriated profits, they won’t come home. Zero tax on repatriated profits is the easiest win-win tax ever. It’s a no-brainer!
Then! Make these rates permanent! Uncertainty is one of the biggest inhibitors to economic growth that we face. When people and businesses are uncertain about rules, regulations and taxes, then they do not plan for growth. They plan for survival.
America is ready to thrive again!
Many families have incurred additional debt just to survive in this stalled economy. And many businesses have been hanging on trying to avoid bankruptcy. This is why I propose, for a year, a real payroll tax holiday of 6.2 percent for all employees and employers. This would help families and businesses avoid the ever-increasing number of bankruptcy filings, while the other tax reduction proposals kick in to boost the economy.
EGP #2: Economic growth is the result of risk taking
Risk taking is the expenditure of time, effort, resources, capital, creativity, energy, and passion, all with the expectation that it will pay off, but with no guarantee it will do so. A capital gains tax is a wall between people with money and people with ideas. Remove the wall and more ideas will get financed, and more jobs will be created. Take the capital gains tax rate to zero. Permanently!
Excessive and confusing regulations also discourage risk-taking. They are a wedge between the gross revenues generated by a business and its bottom line profits. As the wedge increases the profits decease and the number of people they can hire decreases. As president, I will appoint a regulatory reduction commission for every federal agency to determine ways for government to truly help businesses instead of slowing them down. It’s common sense because it helps fuel the engine.
Without risk-takers, there would be no risk taking. A Cain presidency would applaud and encourage the business sector and its leaders for the services they provide to their stockholders, employees and their communities. They are the real job creators and not government, and profit will no longer be a dirty word.
EGP #3: Measurements must be dependable
An hour of time must be 60 minutes. A foot must be 12 inches, and a pound must be 16 ounces. A dollar must be a dollar!
Without that dependability, the economy would be filled with too much uncertainty and eventually become dysfunctional. Stabilizing the value of our dollar starts with dramatically growing our economy, plus dramatically reducing our national debt.
The economy will grow robustly with the measures proposed in this commentary. And to seriously reduce our national debt we must restructure federal assistance programs to encourage and empower people to help themselves.
As such, I support the Ryan budget plan, which is so named after its lead congressional sponsor, Representative Paul Ryan (R-WI). The plan defunds ObamaCare, and restructures the way we spend money on Medicare, Medicaid and the Food Stamp Program. The plan also calls for the privatization of Fannie Mae and Freddie Mac, and a permanent ban on earmarks.
To tackle the Social Security crisis, we must pass an optional personal retirement account system, which would dissolve the current non-sustainable system over time. Current retirees and people near retirement would not be affected, while younger workers would be able to designate a portion of their payroll taxes to an individualized account for their retirement.
One of President Obama’s departing senior economic advisors, Austan Goolsbee, stated recently that the business sector must lead this recovery, and he is correct. The problem is that this administration has done nothing to fuel the engine.
As a result, we can only expect this economy to remain in a state of stalled.
Where there is no vision, the people suffer.