Solutions from “The Conscience of a Libertarian”

Last week, I reviewed “The Conscience of a Libertarian” (2009), but I couldn’t fit all of Wayne Allyn Root’s reform ideas into a book review.

Root suggests ways to reduce the federal government’s payroll, reform Congress and the Legislature, and downsize government, but I’d like to highlight his Economic Stimulus Plan (pages 240-243).

A seven-point plan to stimulate the economy:

1. Create a One Year Federal Income Tax Vacation. Did you know that we pay around $1.3 trillion in taxes each year, but according to CNN Money we’ve already spent $3 trillion (and committed $11 trillion) in stimulus, bailouts, and guarantees.
–> Could Hawaii afford a one year income tax holiday? Probably not. But maybe we could try a six month payroll tax holiday to help small businesses.

2. Institute a five-year Capital Gains Tax Phase Out, to encourage investment and economic expansion.
–> Could Hawaii eliminate state capital gains taxes? Absolutely. Capital gains are earned on after-tax money and are already taxed at the corporate level (before dividends are distributed).

3. Eliminate all capital gains taxes on investments, dividends, and interest for people aged 55 or older. This would help older Americans in their retirement and encourage all Americans to invest their money.
–> Could Hawaii eliminate capital gains taxes for seniors? Absolutely, though I think an across-the-board cut would be better. The money they keep could make a big difference for people on a fixed income.

4. Cut the federal business income tax to 20% (or lower) for large businesses and 10% (or lower) to encourage small businesses.
–> Could Hawaii cut business taxes? Why not? This could replace business tax credits for special interests – I mean special industries – and help attract new businesses to Hawaii.

5. Eliminate capital gains taxes on the profits from the sale of principal residences, to encourage the housing market and home sales.
–> Could Hawaii eliminate state capital gains on home sales? A principal home is not a luxury; and homeowners take all the risks of their “investment” with after-tax money.

6. Offer a $7,500 tax credit to any employer who hires a new full-time employee, and a $10,000 tax credit if the person they hire was out of work at the time. This would encourage new job creation and hiring.
–> Could Hawaii offer a new hire tax credit? Yes, though a payroll tax holiday would help all businesses.

7. Create a national flat tax with only two tax rates: 15% on all income up to $500,000, and 10% on all income above $500,000. Instead of punishing success, this reverse flat tax would reward success.
–> Could Hawaii enact a flat state income tax? It would certainly reduce paperwork and simplify tax returns. Hawaii has one of the highest income tax rates in the nation, while seven states have flat personal income taxes. But I’m not convinced about the reverse flat tax.

Do any of these stimulus ideas make sense for Hawaii? What are your ideas for Hawaii’s economy?

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