Professor Elam

Sunday Sept 12, 2010

One outcome of a business college degree, should be the ability to dissect the gibberish of someone like

 Austin Goolsbee, Chair of Economic Advisors, who was just on Chris Wallace Show. Austin does not appear to have been shaving as long as I have owned my current automobile but that aside, let's examine some of his contentions.

A 13% tax increase will not hurt small business which we want to expand. 

Nonsense, many small businesses file on a Schedule C 1040. If one owns say four pizza parlors, an annual income of $250,000 is not unreasonable. In this environment the wise owner will put that in the bank to cover potential problems in the future. Whet good does it do for the government to take  $32,500?  How is the government going to spend the money, pay debt to the Chinese?

Of course keeping any tax cuts costs money.

This insane view is that money which does not flow to the government 'costs' money. I suspect that Alexander Hamilton would have the opposite view. Money which is not retained in the private sector to be spent via Adam Smith's magic hand has a very real cost, the chance the government will  wisely spend the money is nill. Yet notice that every and I mean every economist the government has takes this view. 

The business cycle?

Austin never mentioned that we are half way through a typical 18 year business cycle. He of course blamed it all on the last administration. The problems today are the result of decades of over spending by governments at all levels. All government now consume about half the economy, how can can the economy expand if half goes to government?  

I seriously doubt this guy has ever filed tax returns for people, hence he understands very little about people's attitude towards taxes, much less who pays and on what form. 

Oh my solution would be to 

repeal the government mandated health care program, institute a health care IRA, let insurers compete across state lines, all medical malpractice to be decided by an independent board of doctors

have a payroll tax holiday for the next six months, no SS taxes paid by employer or employees

repeal corporate income taxes

eliminate the double tax of the dividend to the payer and recipient

eliminate all cap gain taxes for one year

eliminate minimum wages laws

taper down unemployment compensation, checks get smaller after the first three months going  to zero letting folks know this is not their new job

but, and Congress will oppose this, limit all congressional spending to 10% of gross domestic product

try it see what happens…..