President Obama has proposed to spend $446,000,000 more dollars on stimulus. We can be sure he intends to earmark funds for political benefactors and continue the same type of crony capitalism we have seen him repeatedly engage in with big labor, big green, and other liberal constituencies. He thinks any opposition can be painted as an indifference to job creation. To that end, conservative alternatives to job creation are essential.
To my mind, the cornerstones of conservative job creation are growth policies that enable private sector job creators to create and sustain employment. Certainly low taxes are part of this. Every dollar a business has to give to the government is a dollar it does not have for spending on its business development.
Here is my alternative plan for conservative job creation. Call it “trickle up economics,” or call it what you will, but I believe it gets money to businesses with successful business models in a more meaningful way reasonably calculated towards job growth.
1. Establish a $1,000 investment credit for every taxpaying citizen. There are an estimated 138 million tax paying citizens, so this comes out to a cost of $138 billion dollars, per year. Every taxpaying citizen would be empowered to invest $1000 in one or more businesses that they believe are worthy of investment. They could put the money in the New York Stock Exchange, a mutual fund, or that new bagel shop with a good location down the street. They could invest in a friend or family member’s start up business idea, and aspiring entrepreneurs will by word of mouth have brand new sources of revenue and investors. The only parameters are that the business must employ American workers, pay corporate taxes to the United States, and they must invest the money in a business for a reasonable minimum amount of time to be set by statute (i.e. three years, perhaps) before withdrawing their funds.
This is essentially a tax break with incentives for civic participation. Job creation is everyone’s responsibility. I call it “trickle up” economics, because the most successful new entrepreneurs will be those who can network effectively through start up plans that appeal to the common sense of the American people and navigate the free market successfully.
Further, it is anticipated that this investment program will create new waves of solicitation for investment through an army of new investors that will reach every sector of our populace. Once citizens realize the financial benefits to investment, they may also choose to invest their own dollars, thereby multiplying the amount of revenue available. As interest rates are frankly unreasonably low for investors, this new wave of opportunities will likely increase investment. The truth of the matter is now that most Americans do not invest because they have either no means, or no knowledge of how to do so. This will fundamentally change that. (It is also worth noting that those who do hold investments in the market overwhelmingly tend to be more conservative than their non-investing fellow citizens). Banks will be able to share the load of investing in businesses that can meet reasonable investment benchmarks, providing another multiplying effect.
2. Establish tax breaks for small businesses that increase as they hit certain benchmarks of employing American citizens. For example, if you hire at least one American citizen, perhaps that is worth a tax break of $1,000. If you have at least 5 full time employees (FTE), that may be worth $10,000. If you hit 12 FTE then that is worth $25,000. If you hit at least 50, perhaps that is worth $100,000. This should incentivize small businesses to hire more workers to reach threshholds. It also provides tax relief so growing companies that dare to hire American workers are rewarded for doing so. It incentivizes American hiring, and it disincentivizes outsourcing.
3. Reorganize government to establish more small business technical support and basic management training. Too many people have good ideas but no management know how on basic things such as handling payroll, providing for liability exposure, how to attract investors, how to market, etc. To be sure, the best quality on all these points necessarily and naturally will come in the private sector itself. These industries will grow though only as more businesses grow and survive. Otherwise they have no client base. The government support need not be as sophisticated as what such private support companies provide, but establishing such support enables the free market to compete by allowing entrants to the market through removal of overhead driven by ignorance.
We have the most educated people in the world. We have the most freedom loving people in the world. We have a national history richly steeped in the notion this is a land of opportunity. But we have no system which really taps into all of this. 138,000,000 heads are better than 535 Congressman and their aides. 138,000,000 investors each driven by their own interest to realize an investment with a worthy return are going to be less influenced by connected, corrupting lobbyists that have permeated and ruined too many of those 535.
Last, it makes good political sense. Democrats cannot feasibly oppose such opportunity for the middle class in particular or for the poor to whom such money could mean so much. It provides a cheaper alternative to Obama’s stimulus while more reasonably calculated to establish business models that last beyond shovel ready projects. It puts money in the hands of the American people for the sole purpose of business investment and job creation.