Five policies and programs to spur business creation and hiring:
Corporate Income Tax
Eliminate it. It’s double taxation. If you want to tax rich people, tax rich people. More importantly, it leads to shenanigans like tax inversions, keeping cash overseas, and looking for crazy legal loopholes to reduce taxes. This system favors large companies over small companies, international companies over domestic companies. Kickstart the creation of new companies by eliminating the corporate income tax.
Universal Health Care
Implement it. Give every aspiring entrepreneur the freedom to start their own thing without worrying about not getting the health care they need or going bankrupt getting it. Take the burden of providing insurance away from companies, where insurance costs can be a significant percentage of the cost of labor. Give every employer a discount on new hires by removing this cost.
Payroll Taxes
Eliminate them. They’re highly regressive, punitive for the self-employed, and ultimately a legal Ponzi scheme where current workers pay for old people’s basic income and medical insurance. Fund Social Security and Medicare out of the broader tax base, and stop arguing over when the Ponzi scheme is going to collapse. Once again, make it easier for employers to hire new workers without having to worry about these additional costs.
Universal Basic Income
Implement it. No means-testing, no applications, no judgment. Just a guaranteed Basic Income for being an adult US Citizen. When basic needs are met, people have more freedom to start new companies or new careers. At the same time, we can dramatically reduce poverty and focus on productivity.
Minimum Wage
Eliminate it. It’s a burden on businesses and ultimately leads to an increase in part-time work, just in time shift scheduling, and contracting out services to contractors. The goal behind the minimum wage is to ensure that low income workers have a basic level of income and quality of life, but this isn’t the right tool.
Five ways to pay for them:
Income Taxes
Add more brackets. Under the current system, $250k is taxed at the same rate as $500k, $1m, and so on. Adding additional brackets and higher rates at those brackets will make the tax code more progressive, ensuring that those who benefit most from our society also contribute the most.
Capital Gains Taxes
Increase them. Introduce brackets to ensure savers in the 99% aren’t taxed at the same rate as C-level executives in the 1%, but let’s drop this charade that they money made through stock, options, and other means of compensation isn’t the same as income.
BAT or VAT
Implement one or both. Either the Border Adjustment Tax or Value Added Tax will generate revenue based on economic activity in a more equitable manner, and should favor companies that make and sell stuff here in the United States.
Social Welfare Programs
Eliminate the transfer programs. Welfare (TANF), Food Stamps (SNAP), and Disability (SSDI) are all intended to provide cash assistance to people in need, but come with strict rules, differing qualifications, and a sense of shame. They’re also subject to shenanigans by the states (TANF dollars going to relationship classes and abstinence education). Universal Basic Income eliminates overhead, fraud, and abuse, and lets people make decisions about how best to spend their own money, whether that’s paying the utilities, getting a degree in nursing, or investing in some business equipment.
Deductions
Drastically scale back and phase out deductions. Deductions favor homewowners over renters, parents over the childless, religious people over the non-religious, the wealthy over the poor. It’s hidden spending and it’s a wasteful tool for social policy. If you want to encourage buying a house, installing solar panels, having children, set aside funds for each goal and ask people to apply for those funds, then deposit the funds in their Universal Basic Income account. Measure and examine the effectiveness of each policy each year and decide whether to do it again the next year. Don’t make this kind of spending universal, perpetual, and expected.
The Reality
Both parties and most taxpayers will likely reject different parts of this plan. It will never get anywhere.
Image CC BY John St John