House Speaker John Boehner should give in to President Obama’s demand for greater tax revenues as part of a deal — along with massive spending cuts — to cap the debt ceiling.
In fact, one could argue that the single most effective action that Republicans could take right now would be to jack up tax revenues. Under this plan, the rich would pay substantially more into the U.S. Treasury.
How can a conservative Republican back such a plan?
Because it works, but perhaps not the way the president might wish.
You see, the best way to boost tax revenues is to slash tax rates immediately, and in the long-term.
House Speaker John Boehner, R-OH, should tell Barack Obama: “Mr. President, you help us cut the tax rates, and we’ll man the wheelbarrows to tote the surplus tax receipts into the Treasury vault.”
If the president really wants to pay down our debt, and get rid of annual deficits, the fastest way to do that is to cut spending and increase revenue. And the best way to accomplish the latter is to unleash prosperity through reducing the tax rate paid by individuals and corporations. Of course, corporate taxes are also paid only by individuals (shareholders, customers, employees), since a corporation is a fictional entity composed of individuals that must recover increased expenditures through higher prices, lower dividends, or spending reductions, of which wages comprise the lion’s share.
As we boost tax revenues by slashing tax rates, confidence will grow among our global creditors (like China) as they see our commitment to fiscal restraint and our burgeoning ability to cash their mature T-bills. As our facility to repay debt increases, our cost of borrowing decreases.