Posts Tagged ‘consumption tax’

Gary Johnson and Good Government

Outside of New Hampshire and his home state of New Mexico, Gary Johnson is relatively unknown. The establishment press has essentially ignored this successful and popular former two-term Republican Governor since he announced his candidacy for President in April. Perhaps this will change for the better in the aftermath of his breakout performance in the Fox News-Google debate. Regardless, it speaks volumes that the most fiscally conservative governor in the country is the only Republican presidential candidate with a positive favorability rating in his or her home state – and Johnson’s home state happens to favor Democrats by a 2-1 margin.

An entrepreneur with no prior experience in politics, Johnson promised to bring the citizens of New Mexico “a common sense, business approach to state government. Issues first, politics last. Everything will be a cost benefit analysis: What are we spending our money on and what are we getting for the money we’re spending.” During his administration, Johnson’s approach to good government led him to veto 750 bills, more than the other forty-nine governors combined, with only two overrides.

When asked about his tenure in the Governor’s chair, he maintains, “People appreciate good stewardship of tax dollars.” Moreover, Johnson is not a social conservative, and is quick to point out that he is, arguably, “the only Republican presidential candidate not running on a social agenda. I think in general, the world vilifies Republicans based on their social conservative agenda, and yet there is no representative of Republicans that don’t hold that belief on stage.”

Gary Johnson’s platform greatly differentiates himself from the status quo. “I am promising to submit a balanced budget in the year 2013. That means cutting 43% of what we’re currently spending.” Johnson arrives at 43% since we’re borrowing forty-three cents out of every federal dollar spent. His jobs plan involves eliminating the entire federal tax code in favor of the Fair Tax, a one-time 23% federal tax on consumption rather than income, stating, “The Fair Tax is exactly what it implies.  It’s fair, and it’s simple.”

This proposal would also eliminate the corporate income tax and business-to-business tax in an effort to reestablish the United States as the world’s premier environment for commerce. Johnson asserts this bold move will create a new jobs boom virtually overnight, prompting the rhetorical question, “Why would you start up, grow, nurture business anywhere in the world, other than the United States, given a business environment that would have zero taxes?”

Embracing spending cuts, Johnson is not afraid to tackle the third rail of GOP politics: military spending. “Can we provide a strong national defense for this country, and cut military spending by 43%? Yes, we can. The operative word being ‘defense,’ as opposed to ‘offense’ [or] ‘nation building.’” Johnson opposed the Iraq war and Libya intervention from the start. Initially, he believed Afghanistan was justified because we were attacked, but after six months, “we effectively rooted out Al-Qaeda.” Johnson also advocates ending our foreign entanglements “tomorrow.” For all the problems we might encounter in the face of immediate withdrawals, Johnson argues we’ll be faced with those same problems if we stay for another five, ten, or twenty years.

Johnson doesn’t shy away from the Medicare/Medicaid debate either. As Governor of New Mexico, he reformed Medicaid from a fee-for-service model to managed care, saving money and developing an improved health care delivery system. “I think the federal government should block grant the states a fixed amount of money, 43% less than what we’re currently spending, do away with all the strings and the mandates, and leave the delivery of health care to the poor and those over 65, to the states.” If the federal government removed the strings and the mandates, Johnson believes he could have realized 43% in savings. “I think the same could be said of Medicare. If we don’t do this, the notion that all of it goes away is just what’s going to play out: there won’t be any health care for the poor or those over 65, if we don’t address a mutual sacrifice right now by all of us.”

Even amidst the current financial crisis, Johnson remains an eternal optimist, saying with a smile, “We put a man on the moon. We can balance the federal budget!” He firmly believes the competitive spirit of America is the answer, with more federalism at the forefront of Jonson’s solutions. The states represent “fifty laboratories of innovation, fifty laboratories of best practices,” and essentially, fifty laboratories of democracy.

Utilizing education as an example, Johnson asserts, “We’re going to dramatically improve education in this country, because we’re really competitive, and if we’ve got fifty states competing for best practices when it comes to education, it’s my belief we’ll actually see some best practices that will get emulated by the other states. I think you’ll also see some spectacular failure, which will get avoided. But the notion of ‘Washington knows best,’ the notion of ‘Top-down knows best,’ that doesn’t work.”

Good government comes easy to Gary Johnson. His dedication to fiscal responsibility and a live free, hands-off approach to social issues make him a popular figure across the political spectrum – especially amongst those familiar with his resume. Johnson believes his anti-establishment grass-roots campaign is gaining traction in New Hampshire, where he is putting “all [his] chips on the table.” Like so many political underdogs before him, Governor Johnson is betting on New Hampshire to catapult him from obscurity to national prominence.


Tax Consumption, Not Income

Effective consequences of income taxation are creating economic uncertainty and stifling growth. They are far from popular and even further from necessary. Throughout American history, income taxes yield approximately 19% of GDP regardless of marginal rates – indicating a spending problem as opposed to a revenue problem. With a sputtering economy and increasing national sentiment favoring cutting government expenditures, the only logical solution is the elimination of all income taxes and the implementation of a static rate consumption tax. This essential measure will empower individuals to make their own economic choices, instantaneously create jobs, and force the federal government to downsize.

Income taxes represent a restriction of economic liberty. Currently, government allocation of individual earnings denies people the opportunity to make decisions for themselves. However, the consumption tax enables citizens to make pre-tax choices. Certainly, more money in each hand translates to increased consumption, investment, and savings. Since consumption and investment fuel the markets, this can only lead to an uptick in economic activity while increasing the rate of growth of savings.

In the wake of eliminating income taxes on corporations, millions of jobs will be created virtually overnight. Businesses will no longer need to move offshore, exploit loopholes in the tax code, lobby for subsidies, utilize debt financing to offset tax liabilities, or seek out foreign labor markets to reduce costs. More importantly, corporations will flock to the United States knowing there is an environment of certainty in which their business can flourish. Certainty for business means stability for individuals, yielding prosperity for all.

Perhaps the greatest impact of instituting a consumption tax will be felt within the federal government itself. As entitlements engulf the budget, transferring the onus of planning for one’s future from government to the individual will have a monumental impact. Not only will people have more money and increased choice with fewer obstacles, but a limited social safety net can be salvaged to provide for those truly in need. Furthermore, government spending itself will develop a targeted, less frivolous process out of necessity – eliminating waste and inefficiencies.

In a true free market, a level playing field signals certainty to its participants – fostering and encouraging market activity. Eliminating income taxes in favor of a static rate consumption tax will accomplish this measure by removing unfair advantages to politically well-connected individuals, corporations, and special interests. Individuals will regain control of their respective financial futures by making decisions only they can make – how best to allocate income toward consumption, investment, and savings for their specific needs. Moreover, industries will realize an influx of competitors to innovate and open new markets, creating countless jobs in the process. As individuals and businesses are liberated from income taxes, government spending will readjust to its newly concentrated environment – thanks to the simple measure of adopting a consumption tax.

Printing Money Won’t Help

My letter to the St. Petersburg Times was published on Sunday, August 14th.

Enough With the Economic Stimulus

Here is a letter to the St. Petersburg Times:

The case for “a massive stimulus” is extremely flawed (Think big on economy, August 11).  We’ve tried this same approach in perpetuity, hoping for different results.  The rationale put forth echoes assertions like, ‘the other stimulus wasn’t large enough.’  It didn’t work for Herbert Hoover or FDR, nor has it worked for George W. Bush and President Obama.

Recklessly printing money coupled with “serious tax hikes” will not increase economic output, or create jobs.  Accelerating the rate of growth of inflation is the only outcome of major stimulus.

The mechanism for creating jobs and increasing economic growth is to provide a level playing field, with certainty in the marketplace.  If the federal government truly desires to tackle our economic woes, it can start by eliminating the income tax on individuals and corporations, and replacing it with a consumption tax.

This simple measure will instantaneously create jobs and increase the rate of growth of investment and savings without eliminating the social safety net for those truly in need.


Craig D. Schlesinger

Economy Takes Center Stage

My letter to the Los Angeles Times on creating jobs by eliminating the income tax and implementing a consumption tax was published today.

Focus on Jobs by Eliminating the Income Tax

Here is a letter to the Los Angeles Times:

President Obama recently declared “it was time again for Washington to focus on jobs” (Now, Congress and Obama need to focus on jobs, August 3).  Having already experienced the recent failures of economic stimulus under Bush and Obama, there is a better mechanism for increasing the lackluster growth rate of GDP and job creation – eliminating the income tax on individuals and corporations and replacing it with a consumption tax. 

Eliminating income taxes will ignite a whole new jobs boom by creating an environment of certainty for businesses, removing the need to seek out loopholes and foreign labor markets.  Corporations will flock to the US, leading to greater competition among industries that will create countless jobs in the process.  

Moreover, eliminating income taxes will increase individuals’ consumption, investment, and savings, resulting in an improved rate of economic growth.  Due to the ensuing rise in consumption, sufficient tax revenues will be collected to fund the federal government.  Most importantly, the removal of unfair tax advantages to politically well-connected corporations, individuals, and interest groups will create a level playing field and certainty for all market participants – fostering and encouraging economic activity.    


Craig D. Schlesinger

More Taxation is Not the Answer

Here is a letter to the Chicago Sun-Times:

In the wake of the recently passed debt deal, the Chicago Sun-Times asserts, “President Obama’s job is to convince the nation that more tax revenue ­­— not just more spending cuts — must be a part of the two-stage deal”  (Obama must find a way to boost U.S. revenue, August 2).  However, income taxes aren’t the solution, they are the problem.

Simply raising marginal tax rates will accomplish nothing, since tax revenue as a share of GDP is historically 18-20% regardless.  Our lackluster revenue and economic output is due to unemployment, and the best way to foster job growth is by eliminating all income taxes on individuals and businesses.  If the US taxes consumption rather than income, a whole new jobs boom will begin instantaneously.

Absent an income tax, businesses will exist in an environment of certainty without the need to seek out loopholes and foreign labor markets.  Moreover, corporations will flock to the US, firm in the knowledge that this is the best country to start-up and grow business.  As industries realize an influx of new competitors to innovate, countless jobs will be created in the process.  Certainty for business translates to stability for individuals and a prosperous society for all.

Furthermore, individuals gaining the freedom to increase their consumption, investment, and savings will result in an additional uptick in economic output.  Since the wealthy account for the largest block of consumption, they will indeed pay their “fair share” of taxes.  Eliminating the income tax and replacing it with a consumption tax will also remove unfair advantages to politically well-connected individuals, corporations, and special interests – providing a level playing field for all market participants.  How does that translate to a “kick in the gut to the middle class”?


Craig D. Schlesinger

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