Many Americans believe that the recession will soon be over if we just raise some tax revenue, make a few cuts, and stay the course. They’re sure that the pull back from expensive and unsustainable entitlements in Europe and the riots in the streets of Greece can’t happen here.
Like teenagers on a parent’s credit card, our government keeps spending like someone else will pay for our exploding debt. But with the number of Americans facing imminent foreclosure and out of work, it’s clear that the stimulus plan, the “cash for clunkers,” the “shovel-ready” projects, and the bailout of companies “too big to fail” failed to produce a strong economic rebound.
When the Democrats were in control of both houses of Congress and the Presidency, they failed to even pass a budget, much less propose needed cuts. With the August 2 deadline for raising the debt ceiling closing in, they seem more focused on playing the political blame game—it’s those evil Republicans again who want to take away your pensions and your entitlements and push grandma off the cliff!
President Obama continues to talk about “shared sacrifice” by taxing the rich who can “afford it.” Those “rich” Americans who have the funds to be part of the solution aren’t investing in new businesses or creating new jobs because they’re uncertain as to what new taxes, costs, or regulations they’ll be facing. Instead of being honored and rewarded for producing tax revenue and jobs, they know that they’re the “only Americans” to be sacrificed! It’s time for true “shared” sacrifice, opportunity and community.
Instead of expecting more sacrifice from the same 5% of citizens who pay more income taxes than the rest of Americans combined, we could learn from Russia. In the former Soviet Union, they used to say, “They pretend to pay us, and we pretend to work.” The government controls and heavy taxes turned business underground. Over 50% of their economy was “on the left” involving hard currency or barter, but not anymore!
In 2001, Russia became the largest country to implement a flat tax of 13%. With that true “shared sacrifice” by everyone, the value of the ruble has stabilized and government revenue grew 624% from 2000 to 2007 (175 to 1,267 billion rubles). Russia’s economic recovery is far more robust and stable than our own.
With the high taxes, costs and regulations imposed in America today, more and more of our own economy is conducted in cash. Contractors hire illegal immigrants under the table. A fair, flat tax would make such arrangements unnecessary and would bring many additional benefits.
Alvin Rabushka of Stanford University's Hoover Institution (http://flattaxes.blogspot.com/) argues that the flat tax would replace the 66,000 page U.S. tax code with a single rate and no deductions other than personal exemptions. In addition to having an individual tax return that would fit on a simple postcard, there would be pressure to cut costs because voters would be spending “their” money, not just the money of their “rich” neighbors. The more government would spend, the more all Americans except the poorest of the poor would pay!
“Shared opportunity” means letting people get back to work. People want jobs, not handouts. Germany has weathered the global economic challenges far better than America and many in Europe. Instead of raising the minimum wage and increasing the costs to hire people, they prefer to pay companies to keep people in part time jobs than to pay unemployment benefits. They encourage low-paying apprentice positions to learn trades and professions. Such programs let workers prove their value and move up their career and wage ladder when they do. America should do the same.
But with so many hurting and struggling in these challenging economic times, we would also need a recommitment to “shared community.” Free enterprise allows people to achieve and to earn rewards commensurate with that achievement, but in a world with rampant unemployment, it would be wise for the most successful in our midst to know when enough is enough. There are CEOs that could put their workers ahead of that next “added” incentive. While the NBA and the NFL players and owners squabble over millions, small businesses who are already struggling face devastating losses if seasons are cancelled. No law should limit them. No taxes should be imposed beyond what others pay, but it’s not time for successful Americans to demonstrate more concern about the workers and small businesses that depend upon their business.
There is a point at which today’s top salaries can seem obscene. Zig Ziglar once put it best, "Reach down to pull people up with you, or we can wait until we go so high above that they will reach up and pull us down." After all, if we can no longer afford cradle-to-grave entitlement programs, we all must commit to revitalize our local communities by supporting vital charities for the truly needy in our midst. It’s the local churches, synagogues, civic groups and citizens who must put their faith and values into caring action.