Goldilocks Needs Tax-Reform, Not Populism

Townhall.com ^ | January 4, 2008 | Lawrence Kudlow

[keepitreal]

Yes, corporate profits are slowing and jobs are softening. Despite 52 months of ongoing jobs gains and 1.3 million new payrolls in the past year, December jobs registered only 18,000 and the unemployment rate ticked back up to (a still historically low) 5 percent. Despite years of gains from a booming business sector, corporate profits are in fact falling at about a 6 percent clip.

But the last thing we need now is root-canal economic populism from the campaign trail and the mainstream media telling us that Americans are unhappy. Unhappy? According to a Gallup Poll released last week, “Most Americans say they are generally happy, with a slim majority saying they are ‘very happy.’” They’re also prosperous. According to Investor’s Business Daily, household wealth in the U.S. soared 51 percent to $58.6 trillion in last year’s third quarter from $38.8 trillion in 2002.

Meanwhile, the Goldilocks economy remains alive and well. It’s still the greatest story never told. And while Goldilocks may have softened somewhat, getting her back on track is not rocket science.

The key thing to remember is that businesses drive the economy. Businesses create jobs and incomes for consumers to spend. Today’s John Edwards/Mike Huckabee anti-business populism sounds more like William Jennings Bryan than Adam Smith. It’s absolutely crazy. They attack Wall Street and investors, which is another way of attacking capital. Without capital investment, there will be no new business, no new jobs, and no middle class.

[keepitreal]

Good read. Kudlow advocates slashing corporate income taxes from 35 to 25 percent. And he advocates an interesting middle class tax cut:

"A middle-class tax cut to help families and small businesses would also work wonders. This can be done by collapsing the three middle-income tax brackets of 15 percent ($15,650), 25 percent ($63,700), and 28 percent ($128,500) into one 15 percent bracket. These brackets apply to small-business owners who may be suffering the high costs of energy and raw materials. The biggest weakness in the jobs report is the household survey which is comprised of these owner-operated small businesses. Household job increases have slumped to only 262,000 over the last year."

[avital2]

there are still 2 big inequalities in our tax system: the tax that certain small businesses pay is the ordinary income tax scale which punishes them versus larger corps and the Clinton Social Security tax hike which punishes low to mid-income seniors which was instituted as part of their tax reform. shocking that Repubs let them get away with it - and haven’t rolled it back and taken credit for it in the meantime.

[expat_panama]

There are people on the freerepublic (this thread is a good example of a bad example) that hate Bush and love populism so much that they're fighting any tax cuts that might help the American economy. 

Makes a person really wonder who's side they're on...

[1rudeboy]

Saw a post from EPI this morning. I haven’t decided yet if the kindergarden-economics crowd is more vocal this time around, or not.

[1rudeboy]

That thread was surreal. Like an alternate FR universe.

[expat_panama]

...an alternate FR universe...

 

 

 

That's a good way of describing the genre, they call themselves right wingers who want higher taxes, big government control, union welfare...

[keepitreal]

Unreal. I feel like the whole world is turning upside down and inside out.

Comments like, let’s hope the dems reject targetted tax cuts so that they can own the recession? What? Why would you want a recesssion just for that?

Then they are speaking about “funding” a tax cut. Huh? That’s dem speak.

What is going on in our country?

[expat_panama]

...“funding” a tax cut. Huh? That’s dem speak.

Here's an idea --we tell the Dems that they've either got to give us half their money, or else they'll need to pay for keeping their money by giving us the other half.

[unspun]

Wrong, Mr. Kudlow. Mike Huckabee is hardly anti-business and Americans resent that kind of obvious mistruth.

Also, the founders — and Adam Smith wanted conscience applied to all phases of American life. National interest, as well.

And, as Madison said, men (even capitalists) are not angels.

Businesses are not to be free from a nation of checks and balances, especially when those business are multi-national (or extra-national) entities.

Let’s get real, Mr. Kudlow. Otherwise, you are hurting your own credibility.

[Kellis91789]

How about something even simpler, Kudlow ?

Eliminate all Corporate Income Tax, and all loopholes, deductions, credits, and exemptions at the personal level. Maybe leave SS income out of the taxable income pool, but that’s all.

Impute all business income to the owners, then tax Individual incomes at 10%. Count the cost of benefits as income to the employee, so people can choose to take the money rather than the employer-dictated health insurance.

You’ll bring in the same $1.4T that all the rigamorole of multiple income tax brackets does. You’ll lower costs to American businesses by 5% - 10%. You’ll get business off the hook for the unknown future costs of healthcare. You’ll have the most attractive investment tax rate in the world. You’ll have eliminated the great pool of non-taxpaying voters.