Wednesday, September 19, 2007

Barack Obama's Tax Plan

Tax cuts are good when coupled with spending cuts

Senator, Presidential Candidate, Barack Obama, its good to see, is calling for tax cuts and a simplified tax compliance and payment process. He is as some writers say- they say it negatively - Workers means it in a complimentary way - a "sincere young man."

But it would be even better if he would address the overall structural problems we have in the USA. The US Government is currently in debt (the amount promised over time minus the expected income over time) to the tune of $440,000 per household. Thats right, you and your children are more than $400 thousand in debt. So, unless you move or something is done about government spending this is the future we face.

So yes, tax cuts are a good idea. Because 1) they let you keep more of the fruits of your labor (and is that not one of the few things we have, the desire to see results for our work and effort and ideas ?) and 2) it allows less money to the government and therefore more for more productive things, not least of which is spending (investing) on things which will help the economy grow and thus reduce the burden of our $440,000 debt. Paying more than 2,000,000 government employees is not necessarily a productive use of money.

But of course as a Democrat (when will people stop acting so blindlingly obvious? For some reason people need to define themselves in terms of what they are not, even if they really are) the Senator wants to increase taxes on capital gains. When you tax something you get less of it. Capital is needed to grow the economy. Again, growth is needed to get us out of debt; God, or non-God depending on your beliefs, is not going to forgive our debt, at least not that we know of. So, no, do not tax capital, cut government spending.

But an even better idea, going along with the Senator's nice idea of making tax compliance less burdensome, is to just have a flat tax on consumption, like most other nations are doing, and which are helping them have more robust and dynamic economies than the good ol' USA. There are two things you can do with your money; save it or spend it. If you save it creates money for investment, investment creates a capital base, which will help up grow our economy and get us out of our individual $440,000 in debt.

Keep on going Senator, you are on the right track, just, you know, try to look at the bigger picture.