How to get us out of the recession in three easy steps (and maintain a straight face while referring to America as the land of the free):
Temporarily cut all income taxes across the board to 15%. This tax cut would last for two years; 2009 and 2010. Since most tax paying entities are realizing massive losses during this time, the effect of drastically lowering the tax liability for these two years has much less of an impact on revenue. It also essentially gives a grant to all companies for two years to help them maintain productivity and prevent layoffs. This temporary flat tax would also prevent tax payers from selling any assets at a loss to take advantage of the tax benefits (it would make more sense for them to hold their assets until the flat tax expires and hopefully by then their assets will have recovered); preventing an asset sell-off which helps stabilize market prices. Compared to the trillions of dollars spent for the current “stimulus”, this real stimulus costs zero to implement, has no bureaucracy to set up, has zero potential for fraud and waste, and can be enacted instantly by simply letting people keep more of their own money. This temporary measure would also serve as a test for future overhauls in the tax system.
Reduce capital gains taxes on any asset bought between Jan. 1, 2009 and Jan 1, 2011 to 5%. This reduction in capital gains taxes would last indefinitely for assets bought in that time period and would be paid only in the year the asset is sold. This would essentially create an artificial window in which an asset can be purchased with a front-loaded discount in the form of a future tax break (unlikely to ever be seen again). This would cost us nothing in the form of immediate revenue loss because the reduction in capital gains taxes would be absorbed over an indefinite period of time over which people decide to sell those assets. This would be a huge and immediate investment incentive that would instantly stimulate the economy (and save everyone’s 401k) with a clearly defined finish line, and it would cost the American tax payer nothing.
Reduce Spending. This is the step most “conservatives” in congress seem to have had the most trouble with. All non-essential government spending should be reduced or eliminated. Any program that is not vital to maintain commerce, defense, or infrastructure, must reduce their budgets by 30% or be fazed out.
Viola. Now, despite a(n unused) degree in business, I am no economist, but I think we just got ourselves out of a serious pickle and without spending a dime. No trillion dollar deficits, no massive debt to be paid off by our children, no wild bureaucracies, no massive fraud. We kept businesses in business, which allowed people to keep their jobs, which eliminated their need for more government programs, which eliminated the need for business killing tax increases and country killing deficits.
That sounded almost stupidly simple.