Wednesday, March 25, 2009

Prominent Michigan Libertarian provides alternatives to gigantic government spending to address economy

I particularly like this piece from the Port Huron (MI) Times Herald by City Councilman and local Libertarian chair Mark Byrne not so much because I agree with every jot and tittle, but because he demonstrates that there are different strategies available to deal with the Great Meltdown.

Moreover, he also demonstrates that many Libertarians are thinking analytically about economic issues and realistic questions of taxation, rather than being slavishly limited in their viewpoints by ideological blinders:

Libertarians predicted the housing bubble bursting and the mortgage crisis. We advocated preventing this by these proposals:

Stop letting Fannie Mae and Freddie Mac make more loans to less-credit-worthy customers each year.

Stop artificially making money cheap to borrow with low federal rates that encouraged borrowing for risky investments.

A 21st-century tax system is needed now. We must switch from income, payroll and property taxes paid by the products produced here to a tax that taxes all products made anywhere the same. This immediately makes our products less costly and foreign products more expensive, a reverse of our current tax system.

Whatever size government we choose, the tax system should not work against us. Our current taxes add 40% to the cost of products and only 6% to foreign products in Michigan. We need a system that taxes both imported and domestically produced products the same, so we don't put our products at a disadvantage.

A 30% sales tax with no other taxes would decrease the cost of producing a product by 40%. A car costing $16,000 to make would cost only $9,600 when sold here at $12,480. Foreign cars now selling for $10,000 would sell for $13,000. Overnight, we are competitive again.

To jump-start the economy from this mess, the $2 trillion in bailouts and stimulus packages could have been used to keep funding the government during a three-month tax vacation.

This would allow a transition from our current tax system that taxes the production of goods to a 21st-century tax system that taxes the consumption of goods with a sale tax. People would start getting their entire pay checks and want to spend them before the 30% sales tax kicks in.

That last paragraph really represents the kind of innovative thinking that is, unfortunately, conspicuous by its absence in much of the current economic debate on the part of either the administration's supporters or detractors.

1 comment:

Anonymous said...

I realize you said you don't agree with everything he said, but if you agree with the priciple he is putting forth then basically you advocate the Fair Tax. Just saying, to the best of my poor Southern Delaware minds way of thinking. Yours Truly,

Marsh Fox