In America, we’ve been blessed with unprecedented prosperity for over 200 years. Credit it to the blessings of God and a potent mixture of innovative minds, self-reliant souls and plentiful natural resources.
Such prosperity, however, can be deceiving: It lulls people into thinking that prosperity is a national birthright. But it isn’t—never was and never will be.
Rather, as I write in my book Getting America Right: The True Conservative Values Our Nation Needs Today, American prosperity is something that every generation must work to perpetuate for themselves and their posterity. Government’s responsibility, meanwhile, is to provide effective yet minimal regulation that promotes prosperity for the whole economy.
In 2006, the U.S. government is not living up to its end of the bargain.
In fact, government’s proclivity for overzealous intervention and regulation is saddling our nation’s economy with unnecessary burdens—like a sprinter wearing shoulder pads.
Consider Sarbanes-Oxley, the corporate governance law whisked through Congress in response to the Enron scandal. The law was supposed to protect American investors; instead, it is costing them and us, the stockholders, billions of dollars. For example, the law requires businesses to archive all e-mail (prime evidence for prosecutors), a job that will cost the average large American company $5.1 million a year—every dime of which will be passed on to shareholders and customers.
Such a law leaves timid, unreasonably risk averse companies in its wake. That’s not a good thing.
Behind every great business coup is a huge risk boldly taken. When government makes such risk taking cost prohibitive, prosperity suffocates.
Conversely, when an economy is powered by healthy risk taking, volatile yet productive, the resulting competition throws off myriad benefits, ranging from new technologies to higher living standards.
In an increasingly globalized economy, it is imperative for American businesses and individuals to have the freedom to innovate and take risks. Otherwise, as the rest of the world speeds toward economic freedom, we will be drifting into the realm of lackluster, also-ran economies, and by extension, lackluster and also ran countries.
I don’t know about you, but that’s not a position in the world that I’m willing to accept. In Getting America Right, I lay out a four-point plan to reduce unnecessary government burdens and free the American entrepreneurial spirit.
Lighten the Tax Burden
At 35 percent, the U.S. corporate tax rate is at least twice as high as the rates companies pay in Ireland, Chile, Hong Kong, and Iceland. Estonia has no corporate tax at all, and even Denmark, Britain, Australia, and New Zealand have lower corporate tax rates than we do. We must strive to match—and then pass—our competitors.
Congress should pass a flat tax for both individuals and corporations. Here’s how it would work: Individual taxpayers would add up income from wages, salaries, and pensions only, subtract a standard personal allowance (more for families), and multiply by 17 percent.
No legalese-ridden IRS forms, no high priced accountants, just a simple postcard size document that takes minutes to complete. This would free up the nearly $200 billion Americans spend on tax accountants for more productive purposes.
The flow of new regulations continues unabated, weighing ever more heavily on business and eroding prosperity in the process.
Congress should rethink the Sarbanes-Oxley Act and remove many regulations that began with good intentions but now cripple small and midsize companies. The offenders include certain health and product safety standards, plus some food and drug labeling requirements.
Eliminate Trade Barriers
Protectionist tariffs, import quotas, and antidumping laws must be cleaned from the books. Antidumping laws are especially damaging. As long as they exist, American companies will have a way to get around free trade agreements and obtain protective tariffs.
Form a Global Free Trade Alliance
This is a new approach to free trade: a voluntary alliance open to any nation that qualifies and wants to join. To be eligible, a country would have to meet four criteria. It must (1) have minimum tariffs and nontariff barriers to trade; (2) be open to capital flows and foreign investment; (3) protect private property and promote business under the rule of law, enforced by a fair, independent judicial system; and (4) not impose any undue regulatory burden on entrepreneurs or business.
At present, only twelve nations could pass all four tests, but another nineteen fail only one of them. Such an alliance offers the potential for a truly global world centered on free trade, one that enhances freedom, opportunity, and prosperity for the citizens of all of its member countries.
These are common sense reforms that will benefit every citizen in our country. The more economically free and prosperous our country is, the better off we all are. That’s the message of Getting America Right and that’s the way toward something we all want: a prosperous and free America.