With so many fiscal issues to deal with, I’ve decided to make a plan for trying to balance the budget and fix this bad economy in our current state in November 2013.
Supply-Side Tax Cuts
Looking at the history of tax cuts in 1921, 1964, 1981, and 1997 we know that tax cuts have worked before in American history and we need them now. At the same time, we can eliminate some rates to get rid of a complex tax system. A tax system that looks like this (for singles):
1. 10% ($0 - $8,025)
2. 15% ($8,926 - $36,250)
3. 25% ($36,251 - $87,850)
4. 28% ($87,851 - $183,250)
5. 33% ($183,251 - $398,350)
6. 35% ($398,351 - $400,000)
7. 39.6% ($400,001+)
Can instead be:
1. 10% ($0 - $40,000)
2. 25% ($40,001 - $199,999)
3. 30% ($200,000+)
Reducing the complex seven rates to three simple rates reforms the IRS and the tax code benefits all of the American people. These are obviously not the only tax rates to deal with because we also need to cut the capital gains tax, the corporate tax, and the estate tax. Once these improvements are made then we will have no trouble creating economic growth.
Raising taxes gives less wealth to people. Those people will be unable to save or spend that money, which in both cases can help the economy (spending allows people to expand their businesses or buy goods and services while saving expands the nation’s loan capacity for entrepreneurs).
Reduce Government Spending and Regulations
In order to balance the budget, we need to get rid of several domestic programs in a slow but steady pace. This way we can balance the budget as workers move into private businesses. This is not an easy process, but it must happen in order to create fiscal responsibility and eliminate the crushing national debt. This debt has been killing our country and it must end.
The privatization of Social Security and Medicare reform should be the first thing on the budget axe. Next would be some national defense improvements to make our military strong, but at the same time less costly. Several departments can be eliminated next with some valuable administrations transferred to others. This easily brings a surplus and ends the deficit in the country.
We also need to get rid of disastrous economic regulations that hinder businesses. We need less red tape that blocks people and instead more doorways offering opportunity. I am not talking about showering businesses with more capital, that’s crony capitalism. Businesses should be able to make decisions on what they think is best and not be held down by the government and special interest.
Sound Money and Monetary Reform
The country has always been much stronger with a gold standard. Since Richard Nixon took the country off the gold standard, we have dealt with the loss of the value of the dollar. We need to bring back the gold standard and return to the age of sound money. It does not necessarily have to be a 1-1 ratio. Gold can be at any different ratio to expand the money supply when needed. There have been cases when a dollar was a fraction of the value of gold and it still worked out well.
This is not the only problem. While I support Milton Friedman’s monetarism and the need for a central bank, the Federal Reserve has sometimes been very outrageous. The executive branch should have more control over what the central bank does and at the same time the central bank should be more transparent. These two things can go a long way to create a safe monetary system.
We don’t need all these different boards and regional banks to run the country that just create more trouble. What we need is a less complex system that works being run by its own secretary that works at the Cabinet, not its own separate entity.
Eventually, the simplified tax rates can be turned into one single rate. A flat income tax rate of 10% is good enough to give the government enough income. The flat tax gets rid of the IRS and replaces it with a postcard. This means more money will be saved and people won’t be stuck with a complex tax system. Russia and many countries in Eastern Europe have tried it with great success, so why can’t the United States?
The flat tax eliminates every other form of taxes and allows everyone to prosper and strongly for economic growth. With a flat tax, more businesses will be tempted to expand and move to the United States. More businesses moving would mean more economic growth because of competition. With these different laws, the country can solve all its fiscal issues.