Less Tax for Economic Turnaround

It’s “tax week” in America. This week includes that infamous date of April 15th where the I.R.S. intrudes on our lives and tries to convince us (at gunpoint and threat of prison) that our money and property actually belongs to them. Over the years I’ve come to realize that the mafia offers a far better deal than the I.R.S. Let’s look at the facts. The mob comes to a businessman (like me) and demands 10% for “protection.” The rub of course is that the protection is from them. The government calls that extortion and will send a mobster to prison for 20 long years for that crime. Yet the same government comes to that same businessman, demands a 50% (or more) cut of his business, and offers no protection whatsoever. I prefer the deal offered by the mafia.

Government also lies, cooks the books, and distorts the facts when it comes to taxes. Obama tells us that tax increases will not hurt the economy. He calls tax cuts “handouts” to the wealthy. He says that tax cuts create deficits. But whenever Obama wants to spur the economy, he is quick to offer tax cuts to his voters. When Obama wanted to sell cars, he offered a tax cut called “Cash for Clunkers.” When Obama wanted to sell homes he offered a tax rebate to homebuyers. When Obama wanted to sell appliances, he offered a tax rebate to consumers. When Obama wanted to encourage spending, he offered an almost trillion dollar stimulus in the form of “tax cuts” to people that never paid taxes in the first place. Weren’t all those programs “handouts”? Didn’t those tax cuts increase the deficit? This is how politicians distort facts and cook the books.

But the most telling story of all about taxes is found in Michigan. Michigan is a big government, big entitlement, big union state run by leftist and socialist progressives (just like Obama). It is no surprise that Michigan suffers from the worst economy in America; 14% unemployment; “empty cities” like Detroit (which has lost half of its population); and leads the nation in moving vans moving out. Yet one thing is working fantastically in Michigan- TAX CUTS!

In the midst of economic Armageddon in Michigan there is one part of the economy that is booming- movie production. Why? Because Michigan offers the most generous tax incentives in the nation for movie-makers. The result? The liberal progressive hypocrites of the movie business…the same ones who support Obama…the same ones who call tax cuts for the rich “greedy”… have moved Hollywood to Michigan! Last year 87 films were made in Michigan- a 900% increase from the year before. 3 major movie studios are opening this year in Michigan. Yes, the tax rebates cost Michigan $40 million…but those same tax cuts produced 7000 new jobs and $325 million in new revenues for the Michigan economy. Now that’s a great economic success story.

Michigan is Exhibit A for proving that allowing taxpayers to keep more of their own money works like magic. Even amidst the most worst economy and worst weather in America, it’s enough to convince Hollywood hypocrites to relocate from sunny Southern California to depressing and freezing Michigan! Can you imagine what a dramatic tax cut would do for the entire American economy?

Well I can- and I’ve got the plan. Let’s institute a one-year “Income Tax Vacation” for the taxpayers of America. This would benefit in particular small business owners- who pay most of the taxes and create 75% (or more) of new jobs. If you let them keep 100% of their own money for one year, they will create the greatest economic turnaround in world history. They will invest it in stocks (driving up the stock market), bonds (driving down interest rates), real estate (ending the foreclosure crisis), starting new business and expanding old ones (creating millions of new jobs and producing millions in new tax revenue). They will invest in and revitalize America.

Obama, Reid and Pelosi (the Axis of Taxes) would say, “But where would we find the money?” Well Obama found the money for $1 trillion in stimulus…$1 trillion for universal healthcare…$13 trillion for bailouts…and billions more for earmarks and legal bribery (to gain the votes to pass all this obscene spending). Those programs have failed to reignite the economy because Obama doesn’t understand simple economics. Small business is the economic engine of America. Yet Obama wants to incentivize everyone in the country- except the taxpayers and small business owners who actually pay the bills…and create the jobs. Reagan’s tax cuts proved that if you motivate small business with a dramatic tax cut, you can turn a deep recession into an economic boom almost overnight. Well this isn’t a recession, it’s a depression. It calls for special measures. This Income Tax Vacation is “Reagan squared.”

Perhaps Obama knows exactly what he’s doing. Perhaps Obama’s goal is to punish, demonize and demoralize the successful…redistribute the wealth…forever cripple the people who contribute to limited government causes…and bankrupt the capitalist system, so that Americans grow desperate and dependent on government. There is one problem with this scheme Mr. Obama- who will be left to pay all the bills?

Wayne Allyn Root
Whiskey & Gunpowder

April 15, 2010

The Daily Reckoning