Saturday, November 13, 2010

A Tax Compact – No One Will Ever Agree on One

What our country has been subject to is two political parties trying to stimulate the economy using their respective formulae for Kool-Aid.  The ideology of each party doesn’t necessarily work as advertised.  Each party should go back to the laboratory and find out what really works.  Our economy lurches this way and that way without real focus.  Republicans stimulate with tax cuts, and then the Democrats stimulate with spending, and we are in a mess.  We need a new approach.

I suggest a new compact between the citizens of the United States and their politicians.  Each party should define how much service government should provide for how much tax.  Make it simple.   For the Republicans, how about basing tax cuts on a set of tax principles, not “yang” the economy from the Democratic “ying” direction?

To create a tax compact with the citizens, the Republicans should answer the following questions.

  1. Who should pay taxes?  50% of the citizenry?  80%?  90% 
  2. Who should be exempt from taxes?
  3. How much tax is too much?
  4. How much tax is too little?  
Answer these like Reagan would.  I am going to give my take on these questions in future postings.  If we establish a baseline based on a set of principles, and if we have to simulate, then we will know the point to which we have to return once growth has been achieved.

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