A couple of friends of mine have proposed lists of economic reforms that Trump would be wise to follow.
This list is from Joe Salerno. I have known him since 1974. He is a sensible economist.
This list is from John Mauldin. He used to be my business manager in the mid-1980’s. He is a sensible newsletter publisher.
The question is this: Which of these reforms could Trump get through Congress? He might get one. He won’t get two.
Reagan astounded the world by getting a Democratic Congress to reduce marginal income tax rates by 25% across the board in 1981. Then he got another round of tax cuts in 1986. The top rate went to 28%. He had a plan. He followed his plan. He reformed little else in eight years. He got what he wanted.
A President must focus on what is most important. He won’t get much. He might get this.
TAX REFORM: AN UNCAPPED IRA FOR ALL
I would like Trump to pursue one policy: the reconstruction of the tax code. Congress would turn the entire code into a huge IRA. A person would get a tax deferral for all money invested. There would be zero taxes on capital gains — personal or corporate — as long as these gains remained in the capital markets. But as soon as this money is transferred to a private account for personal spending, it would be taxed at the personal rate for that income bracket.
If an IRA is a good idea for a little of your money, it’s a good idea for lots of it.
This way, capital would build. Personal pre-tax wealth would build. Economic output would increase. Innovations would get funding. Nobody would owe the government a dime until he took out the money for personal use.
Capital accumulation in a competitive market is the key to economic growth. We need capital accumulation. The tax code should exempt it from all taxation.
Don’t tax the goose that lays the golden eggs. Tax the eggs.
Why isn’t the tax code this simple? Because everyone wants a personal exemption for his tax-free eggs. Everyone wants a subsidy in the form of an exemption for his company and no one else.
We would all do better in the long run if everyone paid taxes only on money spent on himself.
A sales tax would also be appropriate as a trade-off for a lower income tax rate. (Rule: never vote for any new tax without also voting for reducing or eliminating an existing tax at the same time.) Sales taxes are flat. Income tax brackets should also be flat.
But we never get this. “Tax the rich!”
Don’t tax you.
Don’t tax me.
Tax the guy behind the tree.
This is the politics of the fair share. You can read about it here.
Would you join a church that imposed a graduated tithe? No. There is no such thing as a graduated tithe. There is a flat rate of 10%. A graduated tithe would correctly be seen as a violation of the rule of law. “One law shall be to him that is homeborn, and unto the stranger that sojourneth among you” (Exodus 12:49).
A NATION OF THIEVES
We are a nation of thieves. There is no honor among thieves.
The state lays claim on our income.
The federal government lays claim on $210 trillion — present value — of our future income. These are the unfunded liabilities for Social Security and Medicare.
The U.S. government will default. It will have no choice. Then we will see what happens to a nation of thieves. It will not be pleasant, but it will be well deserved.
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Written by Gary North and published at Gary North ~ November 30, 2016.
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