Friday, March 4, 2011

Let me Repeat Myself

A few years ago I posted a blog on the 5 things our Government should do re-boot our Constitutional Republic with Free Market Principles.  I have read, researched and listened to smarter people than eye and I would like to restate my ideas with a bit more detail.  Most of the ideas have not fundamentally changed and despite having fellow libertarians and conservatives disagree with some of the ideas, I remain steadfast in the following solutions to our crisis.  It really does not take much, just some decisive steps to change the rules.  All systems are set up by rules and there are Rule Makers, Rule Breakers and Rule Takers.  When you change the rules, you change the game for most, and when most comply with the game it moves in a new direction.

Here are the now 6 ideas.

1) Tie Gov't spending to 15% of GDP outside of our interest payments. This will teach us fiscal discipline and eliminate the federal governments drug addiction to power.  The States and local governments are responsible for most of the day to day needs of its people and the federal government needs to stick to it original mandate - Protect the borders, Maintain a sound physical infrastructural and Insure free trade between States.  They are also mandated to protect individual citizens Natural Rights of life, liberty and property but must remain defensive in these measures and not active.  All people with integrity budget themselves and only in times of crisis would they ever go into dept.  If Congress declares war (which they have not done since WWII) then the law would not be enforced.

2) Eliminate the progressive tax system and replace it with an increase in duties equal to the highest duties imposed by China (FYI import duty on a Hair Trimmer into China is 35%, the duty into the US from China is
4.2%) and a flat tax where everyone here has skin in the game.  Free Trade is a sham when the rules are different for the players.  Our Trade agreements with China and other countries for that matter are not different than playing baseball where one team gets 9 players and gets to throw pitches from 30 ft and the other teams get only 5 and has to pitch from 90 ft.  Until the local regulations, tax system, subsidies and rules are the same, we need to tax imports, not Americans that create jobs here.  On top of that, unless you have an equitable tax system where everyone has skin in the game you are unduly influencing certain classes of people by playing favorites.  A flat tax is so simple it eliminate the IRS and makes it so easy to account.  NO NATIONAL SALES TAX!  Some so called conservatives think this is a good idea, but it is a very bad idea on 3 points - 1) It is far more complicated as small businesses will have the burden of accounting for this along with the State and local taxes it already has to account for; 2) It will not eliminate the need for an IRS because it is far easier to develop a cash business and hide taxes as compared to a simple flat tax; and 3) It is a progressive tax and to me no different than the current system - exceptions will have to be written in and then lobbyists will work to have their particular industry tax free, etc.

3) Audit the Federal Reserve. Whatever happened to that one.  We either need to have congress manage this entity or repeal the 17th Amendment.  Giving such power over the economy has proven dangerous.

4) Eliminate capital gains and income tax on dividends and replace it with a tax on stock transactions . This will be the key drive to saving our free market.  You see private companies and public traded companies act different because they have different motivations.  Motivations are created by how the rules are set up.  The rules for public companies is to maximize share holder value not cash.  Private companies emphasize cash flow as the owners want to make money.  In a public company, companies are concerned more with the stock price than they are the long term growth of the company.  If our system emphasized cash flow and not stock valuation then those companies that provide a high dividend yield will be rewarded and those that play shell games would disappear.  I will explain this in greater detail in another blog because it really is a way to re-boot our economy and build a solid foundation that needs far less regulation than the current.  You see Enron and others could not have made it as far they did without CASH.  It is impossible to fake cash payments several years in a row.  It is very easy to manipulate the books and use propaganda to maintain a growing stock for years.

5) Eliminate lobbyists as we know it.  I will also talk about this in more depth later on the specifics but in essence, this is an immoral system.  If you have money and power you have influence.  Where is equal protection under the law?   Why should a company, union, pact or organization have more say than I as an individual?

6) Term limit legislation - Easy one and still valid.  Rotate the crops and the ground stays fertile.

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