Mr. Bruce Glensky’s well-written article published on the Opinion page of The Sun News on July 29 (“In defense of President Barack Obama”) highlights the central role that Keynesian economic policy has played in the formulation of fiscal policy by the U.S. Congress beginning even before the publication of Keynes’s General Theory in 1936. In his second paragraph, Mr. Glensky asserts that “Keynesian demand management and monetary policy tools have been utilized to stimulate economic recoveries.” Although both have been used, it is a fallacy to believe that demand management itself has played a significant role in fostering recoveries from severe recessions.
Since the ratification of the 16th Amendment in 1913 authorizing the federal income tax, recoveries from severe recessions can be attributed and, in the future, will continue to be attributed to a combination of the following three factors:
• Tax legislation that increases the after-tax return on the capital and entrepreneurial investments made by individuals either directly or indirectly through the shares of corporations that they own,
• Significant decreases in the cost and suffocating constraints of government regulation on small businesses (which create most of the new jobs), and
• Adoption of federal energy policies that reduce regulatory constraints on the development of domestic energy resources and eliminate mandates and subsidies that misallocate investments within the domestic energy industry.
Each one of these actions stimulates substantial immediate growth in private sector employment, creating an increase in tax revenues and a reduction in welfare payments. Entrepreneurs and successful CEOs do not wait for customers to beg them to produce goods and services – the goal of “demand management.” They are proactive in creating a market for their businesses.
Most of our ancestors came to this land despite great hardships to create a better life for their families through hard work. They believed that our free enterprise economy and political freedoms provided a better opportunity for their children and grandchildren to work for and enjoy a prosperous future.
To the extent that we elect politicians to implement our desire to spread the wealth, it is critical that Congress enact a fiscal policy that facilitates wealth redistribution without destroying the incentive of Americans who desire to work hard and prosper. Replacing the individual income tax with a combination of (1) a national consumption sales tax that applies to 100 percent of all purchases of goods (including houses) and services and (2) a wealth tax (e.g. 5 percent) assessed annually upon household net worth in excess of $10 million will generate whatever amount of tax revenue the people want their government to redistribute and will ensure that the truly rich pay their “fair share.”
Certainly, Warren Buffet, Bill Gates, the Kennedys, John Kerry and the Hollywood elite will gladly lead a grass-roots effort to convince Congress to replace our current insane Internal Revenue Code with this simple tax structure. The unconscionable amounts spent by the IRS to enforce and private individuals to comply with our current income tax laws will then be available to reduce the federal debt, which will otherwise lead to the collapse of our government and the impoverishment of both the poor and the middle class.
The writer lives in North Myrtle Beach.