Consider implementing changes to current American tax policy
The progressive doctrine that has taken over college campuses across the country in the last few years not only raises legitimate concerns about free speech and First Amendment rights, but, more importantly, it has isolated young millennials in platonic bubbles where diversity of all kinds is king, except when it comes to ideological diversity. It is a bubble where a growing majority believes they are entitled to free education and free healthcare, while they see the top one percent as the only barrier separating millennials from a decent shot in life. Reality, however, hits soon upon graduation when one realizes that the math does not add to the dollars on their paycheck. The reason why you cannot find a decent paying job, pay back student loans or buy a house is because the government has, for decades, increased spending and jeopardized wage growth. As a result, dependency on welfare programs has reached an all-time high, according to the .
Ultimately, the real question comes down to whether higher taxes benefit the economy. The Laffer curve is an economic theory used to measure the impact of higher taxes on production; the hump of the curve determines the highest tax rate at which production growth is not affected. In theory, the hump occurs at 70 percent, meaning that the government can theoretically raise your taxes to 70 percent without hurting Gross Domestic Product growth. While both right-wing and left-wing economists agree that hump of the true Laffer curve reflecting the current state of our economy is at a lower rate, they tend to disagree on where to draw the line. In 2010, the American Economic Review published , chairman of the Council of Economic Advisors of the Obama Administration, examining how national income responds to tax. According to Romer, the hump of the Laffer curve actually occurs at the rate of 33 percent. In other words, tax rates beyond 33 percent reduce national income in an economy where 75 percent of the income is taxed at rate greater than or equal to 33 percent. Empirical evidence has proven over and over that tax cuts on individuals and businesses stimulates wage growth. President John F. Kennedy — a Democrat — passed the Revenue Act of 1964, a massive tax reduction bill, which was followed by eight-and-a- half years of uninterrupted five-percent growth, as shown by BEA data.
The issue of government spending is essential to the debate on tax policy. expects budget deficits to consistently grow over the next 30 years. If we follow the logic of the left that the spending pattern is non-negotiable, then how can we sustain a forever-growing national debt? Some would argue that cutting taxes would increase deficits even more, resulting in the same effect on the national debt. That would be true only if one assumes that spending generates the same economic effect as investing. Lower taxes stimulate growth and encourage entrepreneurship and innovation, which can lead to additional job creation, tax revenue and attraction of foreign capital. The resulting activity would increase the aggregate tax revenue and balance the budget. Eventually we can make a decision about whether we want to pay back our national debt because, yes, we have the option not to. In fact, if GDP grows faster than interest rate payments, we never have to worry about the national debt. Such growth, however, is reasonably possible only when the tax code favors the American free enterprise model and a small government. The left-wing spending pattern and growing budget deficit resulted in a marginal growth neighboring 1.5 percent in the eight years of the Obama Administration. Data from the BEA suggests that he was the first president in modern history to never achieve a 3 percent growth rate in a time when the economy is supposed to grow at an even faster rate than normal given that we just went through the most severe recession since the Great Depression. By contrast, Former President Ronald Reagan, who took office during a recession, averaged a yearly GDP growth of 3.05 percent during his tenure. Reagan passed the Economic Recovery Tax Act of 1981 and the Tax Reform Act of 1986, both of which contributed to a successful recovery from the 1981 to 1982 recession, followed by an economic boom and prosperity for all Americans. In 2009, instead of cutting taxes to reboot the economy, the Obama Administration passed a $787 billion spending stimulus known as the American Recovery and Reinvestment Act. It intended to stimulate consumption by sending checks to households but failed unequivocally in meeting any of its goals in raising consumption. To illustrate the reason why this spending stimulus failed, one could think of a family of four that received a $1,500 check from the government. Most people reacted to receiving this check by saving the money in their retirement plans or savings account, instead of spending it on goods and services as the government anticipated, according to a .
Under the status quo, government spending cannot be substantially reduced as a sizable majority of it goes towards Medicare, Medicaid and Social Security, . In other words, the aging population of the United States is not sustainable. Part of the problem is due to a failing healthcare system where government’s interference with the free market has caused a spike in premiums to the benefit of insurance companies and at the expense of taxpayers. It is unfair for hard-working Americans of our generation to bear the cost of an older generation to the detriment of our own standards of living and the future of our kids. , what the average household pays in Medicaid, Medicaid and Social Security through taxes could pay for a 4-year college tuition if invested in a fund. Demographics need to change in order to relieve the burden of an aging population. One way to approach such change is by increasing high-skilled immigration to the U.S. High-skilled immigrants are entrepreneurs, researchers, medical doctors and lawyers who create businesses and jobs, promote growth, pay taxes and exercise an upward pressure on wages. The goal is to shape American demographics in the form of a pyramid, where the base constitutes the youngest demographic. As a result, the exorbitant cost incurred by the older portion of the population will be carried by a larger base of taxpayers, which will reduce the tax costs per capita and enable households to increase consumption or invest in a college fund for their children.