I drafted the following on April 18 of this year. Given some recent reports, I believe my musings are particularly relevant. Additionally I believe that; for those who don't normally follow economics, it is very informative. Please enjoy and consider with respect to the United States' current economy.
Recently the US Governing bodies have been wrangling over budget and tax issues. There seems to be two prevailing opinions put forth by the news media; either raise taxes on some or cut taxes.
I believe the falicy is that neither of these is the real issue.
The real issue is JOBS! Hold on. Before you go sayin' they're two different issues, just follow my logic. The reason we have budget problems is simply spending more money than the government takes in. I happen to believe that cutting spending is a problem that must be addressed. However, as any business owner can attest to, even if you cut spending to the bare minimum you will likely be left with a need to increase revenue. Even if not for immediate needs, you'll certainly need increased revenue going forward.
If we can agree that we'll eventually need greater revenue, the question is how to get it. Since the current tax code places heavy emphasis on income tax, we would do well to have more wage earners in the system than trying to tax more on a dwindling work force. If we overhauled the tax code to move to a "flat" or "consumption" tax, we'd still be better off having more wage earners paying into the system.
Think of it this way; if you want more of an activity, make it less expensive. If you want less of an activity, increase the expense (or taxation) on that activity. That's right, we tax wages for services performed. Is it any wonder then that people have figured out how to do less (or no) work and collect a paycheck from the government?
Once we agree that we must increase revenue to the government, and if we can agree that increasing the number of jobs would do that, we can then focus on bringing those jobs to our shores.
Now that we've agreed that we want jobs here in America, we have to give businesses good reasons to come back here. Our labor costs may be more than other countries, but we have an extremely efficient (don't laugh, it's true) work force. If we were to get rid of many onerous taxes on businesses and roadblocks that prevent businesses from getting permitted in a timely manner, it would go a long way to improve the marketability of the U.S. as a manufacturing haven.
