Morici: To Boost Growth, Everyone Should Pay Income Tax
Each year, automatically adjust those levels up or down so that the share of federal spending financed by the income taxes remains constant. If folks want more or less federal spending, everyone pays more or less federal taxes.
Also, get rid of all the deductions and exemptions -- everyone pays on everything they earn. No special preferences for capital gains or the carried interest of Wall Street financiers. Then the minimum and maximum rates could be set even lower.
These reforms would eliminate the terrible disincentive high taxes impose on small businesses to invest, grow and create jobs. Corporate tax rates could be similarly reformed so that investment decisions are not made on the basis of getting a tax credit but on the likelihood of boosting profits and employment.
For the working poor, having to pay some taxes would be a jolt, as it would be for the elderly depending on Social Security. For the former, the minimum wage could be boosted an appropriate amount -- perhaps 50 cents an hour -- beyond what President Obama and Congress agree. Social Security payments could be similarly hiked, on a one-time basis, by adjusting the payroll tax a few tenths of a percentage point.
A one-time jolt to inflation would follow as wages above the minimum adjusted through the forces of supply and demand. But it would be worth it to have long-term tax sanity. Politicians running for the Senate, House and Presidenct could no longer promise the moon by getting someone else to pay for it, The economy would grow robustly and more Americans would benefit from the best social program of all -- a well-paying job and a promising future. Follow @pmorici1 This article was written by an independent contributor, separate from TheStreet's regular news coverage.
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