The question of whether the federal government can lower taxes while, at the same time, fix the economy at this critical juncture of our history. The answer is, in theory, yes, but it will take some drastic and disciplined action.
For starters, Senator John McCain's proposal to freeze spending on non-critical functions of government is the tactic that is needed to begin the healing. A major criticism of the Bush Administration's domestic policy was that, as a conservative, he failed to reel in spending and, in fact, grew government in a manner that contravenes the Republican mantra. Senator McCain's stance on spending, when contrasted with Senator Barack Obama's proposal to introduce over $800 billion in new spending in addition to the money forked out due to the bailout package , shows a major difference between the two candidates.
Further, it highlights a simple yet clear approach to begin the journey of righting the American economic ship. ...
Even more beneficial to the McCain campaign is this: if Senator McCain held to this campaign promise as president, it would be a break from the Bush Legacy and the last 8 years in the White House.
Without the federal government spending more money, the burden of spending in order to spur the American economy forward falls upon American citizens. This task becomes an easy endeavor if the threats of higher taxes on capital gains, small businesses, and private investors are alleviated.
On the surface, this may appear only as a tax policy that champions protection of the very wealthy and corporate fat cats, many of whom may have contributed to the financial mess that we are in currently. However, history shows us that the ability to invest, spend, and make economic decisions in a freer fashion has resulted in a higher quality of life for citizens around the world. This has been true for countries that traditionally held restrictions on the free market – countries such as India, China, and Russia. For the optimal impact on the economy at a time when we need the economy to churn again, we need as much private cash flow to circulate through business channels to stimulate growth, consumer spending, and in turn, job creation. This can come about when tax burdens are not an issue.
For example, here in North Carolina, there is a movement to lower the corporate tax so that businesses that are enamored with the universities, diversity, talent base, and topography of North Carolina – yet move their businesses to South Carolina, Tennessee, and Virginia due to their tax rates – consider North Carolina more seriously when deciding to bring their organizations (and subsequent jobs) to the Southeast. This thinking led to the growth of Wachovia and Bank of America in the Queen City (versus having these banks stationed in the traditional financial capital of New York City) over the past 15 years, a phenomenon that improved the quality of life for North Carolinians in the Piedmont, including African-Americans.
This is where the betterment for us as Black people comes into play.
If history – including recent history across the globe – shows us that lower taxes and less government involvement provides the incentive needed to create more opportunities and, thus, a higher quality of life for citizens, it behooves us as African-Americans to understand, support, and participate in this principle. We can no longer sit on the sidelines and call this "white man's business" when, in fact, the global economy is now moving along this modus operandi. This involvement must include the Black middle class, especially when it is at a point of time where its size and influence are challenged. Though the reinvestment of Black capital into the market (think of "market" as in running businesses, consumer spending, college education, etc., instead of "stock market", per se), we create additional opportunities to gain equal economic footing within a 21st century America that looks primarily to economic strength as the determining factor for status versus definitions of race and ethnicity. Lower taxes – and thus more discretionary income as a result – afford Black America a chance to invest in ventures such as Black businesses, property in historically-African-American neighborhoods, and struggling Historically Black Colleges and Universities. The vitality of such entities is where the empowerment of the Black community lies, particularly since these institutions are often more willing and better equipped to provide opportunities for younger African-Americans that are talented but underexposed as they attempt to compete globally.
History shows us that free market principles and subsequent policies lead to a higher quality of life for citizens. It also shows that more government, more control, and more taxes often lead to a dampening of the quality of life, usually due to a decrease in quality, efficiency, and opportunity. Again, the previous failures of countries such as India and Russia under economic and political impositions come to mind as examples.
Of course, deregulation to the point of being ruled by impractical (or lenient) policies and greed is not the answer, either. However, the ability for those with money (not just the very rich, but those with the ability to create wealth – including jobs) to have opportunities to invest their money – and create avenues for a higher quality of life for more people as a result– is foundational in our economic turnaround. This can not occur if we are cutting taxes on 95% of all Americans, adding new federal spending by the count of over $800 billion, and increasing the tax burden on those that can directly impact economic movement.
When the Americans government spends, we create more debt. When the American people spend, the wheels of business churn and the heart of our economy pumps. Lower taxes give a better chance of making this happen sooner than later.
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Lenny McAllister is the Political Guru for Fox News - Charlotte and blogs the Republican side of the election for BlackVoices. He is a frequent contributor to The Charlotte Post and The North Carolina Conservative.
Comments: (23)
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By: Anthony Taurus on 10/10/2008 2:49PM
This guy is not paying attention to history as he claims and he's twisting, or spinning, the lower taxes ideal. Lower taxes do not directly equate to greater investment in a way that benefits the US economy as it did up to a decade ago.
Take for example, an American wants to purchase a car @ $35,000. If this car was made in the USA, we could count on the fact that the money will go to people who work in the USA. Unfortunately, chances are this car is NOT made in the USA. Therefore, a lot of that money is going to workers outside of the US, the dealer, and the people at the top of the company.
The problem, the 21st century problem, is that when investors purchase stock, they are not investing in companies that develop the economy of the United States. Instead, they're investing in companies that cannibalize the American consumer base by exporting jobs overseas. At the same time, they're diminishing any potential consumer base in other nations by paying them low wages, so low they can't even afford the products they make.
This is why the 150B stimulus package didn't work either. First of all, most of that money went to the rich. Very little investment is made in the US economy. And, when Americans buy goods, they are imported goods that support other nations. All of this only serves to rocket money to other nations, hence the trade deficit.
Lowering taxes in this economy only serves to worsen it. We need 21st century solutions to 21st century problems. Republican ideals of smaller govt, low taxes, and a free market system do not benefit the American people.
Now we've got Nancy Pelosi talking about "New Deal" style govt projects to create jobs and this will only increase the blood flow to an open, gushing wound.
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By: Jarvis on 10/10/2008 6:14PM
To Anthony:
You are speaking like a TRUE SOCIALIST. With all of the turmoil in the market in recent weeks, the only bright spot that is keeping America's economy going is the Tax cuts of 2003, which lowered taxes accross the board for everyone. What is missing is a Deep Corporate tax cut (say down to 10 or 15 percent) to help spur the American Economy.
Now, this would help some but just lowering taxes is a TEMPORARY solution.
What is really needed is the "FAIR TAX".
The Fair Tax would:
1. Eliminate all Federal income taxes.
2. Eliminate Social Security taxes
3. Eliminate Medicare taxes
4. Eliminate Capital Gains and Dividends taxes
5 Eliminate Corporate Taxes
6 Eliminate Inheritance Taxes
7. The Fair Tax would expand the tax base to include everyone and eliminate Loopholes that the Current tax code include.
Otherwords, workers would get their entire paycheck to save and stimulate the economy. Everyone, including Foreigners who come to visit or who try to illegally stay would be contributing to the U.S. Treasury when they buy something.
All CITIZENS of the U.S. would get a pre-bate check which depends on family size to cover the basic neccessities of life up to the Poverty Level. This keep the poor from paying taxes.
The U.S. would go to a Consumption-National Sale Tax of 23% to replace all of the EMBEDDED taxes that are pass to consumers by corporations and to cover the Pre-bate.
This 23% would be an INCLUSIVE TAX which would have very little impact if any and in some cases lower the prices of products to consumers.
Just based on Americans current rate of spending, the Fairtax would bring in more money for the U.S. government and give working their ENTIRE PAYCHECK.
The FAIRTAX would make America the Business empire of the World. Companies from all over the world and those that left America would return creating MILLIONS of New Jobs.
With your Entire paycheck, you might be able to save more to start a business, save for a down payment on a home or investment property since houses are cheep now, send kids to better schools or college, save for retirement because Social Security may not be there for you.
LOOK, right now, you are paying Taxes on Income and Sales taxes when you buy something. THERE IS A BETTER WAY.
Lets push our Congressional men and women to pass the FairTax into law.
Congress will not change until YOU change. They think Americans are stupid, particularly Black Americans because blacks vote 95% Democrat and ask for nothing but handouts.
Now, you can asked for and demand your entire paycheck.
This might wake up the Democrats and Republicans.
Go to www.fairtax.org to learn more.
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By: Kenneth White on 10/12/2008 11:27AM
We are on the verge of a depresion that will be worst than the 1929 Depression. The same dynamics (many of them0 are the same for today, including deregulation along with corporate greed and the influence of the upper class (claste) of the American society. history tells a lot, especially when European history is the focus of the study. Dr. White
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By: Anthony Taurus on 10/12/2008 2:02PM
Jarvis
The problem here is the difference between theory and practice. In theory, the answer is yes. But, we're not living in this imaginary ideal world where theory works. We live in a real world where we need real world solutions to real world problems. So, the REAL answer is NO.
We still haven't addressed the concept of job creation and the reality that most of our goods are manufactured overseas.
While republicans IMAGINE that lower corporate taxes spur job growth, the reality is that job growth is being spurred OUTSIDE of the United States. And this has nothing to do with corporate taxes because in REALITY most corporations do NOT pay the supposed 35% corporate tax. In reality, corporations pay very little to NO taxes in the United States. Therefore, the THEORY that low taxes spur job growth is proven FALSE in the REAL world.
What will the United States do about creating jobs in the US when it's shown that low taxes are not spurring job growth as intended?
The point of goods being created overseas is to show directly that no matter how much taxes Americans keep it will NOT stimulate the American economy because that money used to purchase goods is funneled back to manufacturing nations.
As for the fairtax stuff, that is the most regressive-styled tax policy I've seen in a long time. If there was a better example for fuzzy math, I haven't seen it yet.
The problem with Republicans, Conservatives and Republican Conservatives is they all live in this imaginary world where theory works and wishful thinking will get us through the day. I, like billions of others, live on the planet earth, 3rd rock from the sun, in the milk way, this universe, this dimension.. welcome to reality. Hi. How are you?
Also, there's nothing wrong with a little socialism. Contrary to popular belief, the whole nation is based on a socialist agenda through taxation - military, police, fire department, and so on. There's no reason why we can not socialize healthcare. The issue is not pushing socialism so far that it eliminates freedoms and becomes fascism. I don't speak like a true socialist. I speak like a true REALIST.
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By: floridashot on 10/12/2008 3:43PM
Anthony, thank you for putting some reality into focus. The American people had better wake up and read, listen and pay attention. I wish your words would hit all political boards. I totally agree with you.
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By: Justina on 10/12/2008 4:38PM
First of all, the only spending excess Bush is known for is the War. Unless Mcain is willing to end the war, in which he is not, then excessive spending will continue. Once again, four more years of the same.
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By: Tata on 10/12/2008 6:13PM
I do not believe in the fair tax. Yes, it is not as fair as it sounds. It is kind of socialism to the rich and the opposite to the poor. Whatever you are making you are paying the same tax in this so called "fair tax." Let me explain in my understanding someone who makes a million will pay 23% when he purchase anything; the same with the poor who made the same year eleven thousand with four family. If you purchase anything you pay equal tax. If not you are not paying anything, but who could pass a day without shopping either gas grocery?
Not only that if you have one car only and the other person has ten cars, who should pay more tax? You and this person are not using the road at the same rate. He should pay his own portion for ten car and you should for your one. However, according to fair tax
This person and you are going to pay the same tax (23% only when you shop)! Well, that why it is backed up a bunch of rich people to socialize the tax, but not the burden.
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By: Mfume Kwazi on 10/12/2008 6:25PM
OMIGOD. Somebody doesn't understand that the same tax *rate* would apply equally to all.
Just like the current sales tax does.
No wonder this country is going downhill...we're too dumbed down.
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By: jarvis on 10/12/2008 6:30PM
Anthony:...
Wake up man!!! Everything start out as a thought (theory) and is turn into realty. Even you was a thought between your mother and father. You think about it, visualize it and WORK to make it a reality.
Economics 101... Corporations don't pay taxes. Half true. They include their taxes in the price of products or services they sell. So you and I and all of Americans end up paying these embedded taxes at the RETAIL level. Millions of people miss this point.
Socialism....this is a no brainer but let me go over this again. The FREE ENTERPRISE system is the best path to prosperity. Socialism do not work, plus it keeps people in poverty by creating only a rich and poor society.
There is no MIDDLE CLASS IN SOCIALISM. The DEMOCRATS ARE VERY AWARE OF THIS. This is why they promote all of these SOCIALIST ideas.
As far as Socialize medicine...Canadian health officials admitted back this pass summer that their healthcare system is about to crumble, in financial trouble with long lines for rountine services and so on.
Russia, Germany and even China realize that Capitalism creates more wealth than Socialism.
Anthony....Low taxes do spur more growth but Tax Reform ie FAIRTAX will create the boom in job growth that everyone is looking for.
Read the FAIRTAX BOOK and go to www.fairtax.org.
Wake up....Read and don't believe the Democrats spin
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By: Phillip on 10/12/2008 8:44PM
This right wing tool wants to continue trickle down. Come on that is what got us here. That and the manipulation of the real estate market which has run the economy since the dot.com bubble. People were encourgaed to borrow against thier houses to spend. Then blamed by the right wing as the source of the problem. Well the banks, brokers, and wall street are in the front of the line for blame. We must regulate and build the economy from the bottom up. The end of trickle down is here!!!
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