Rein In Washington, Not the Rich, For a Better Economy

It's as ugly as it is predictable: When budgets are strapped and programs are at risk, populist demagogues call for increasingly higher taxes on the wealthy. It's nothing but knee-jerk politics of envy, and it avoids the most important question: Will soaking the rich with tax hikes and shackling their companies with onerous regulations provide the average U.S. citizen more opportunities for a better future? And if not, then what will?

President's Obama's April 13 address, while lacking a serious roadmap toward spending reduction, demanded the wealthy pay even more taxes to reduce the deficit - a deficit he helped balloon this year to $1.4 trillion. Meanwhile, talk host Thom Hartmann stoked the class warfare flames by complaining that the 400 richest Americans "control more wealth than 150 million other Americans."

Wealth redistributionists whine that top earners "control more wealth than the rest of us," but they refuse to acknowledge that the federal government is itself a "wealth controller." Government has the unique ability to stagnate economic growth and halt prosperity more than any other "greedy" company or individual through draconian federal regulations that limit investment among the job-creator class.

Three recent government actions have had particularly destructive effects on the economy: net neutrality, Obamacare and the deepwater drilling moratorium.

So-called "net neutrality" regulations adopted by the Federal Communications Commission will certainly smother the success of the U.S. broadband revolution, which has been a boon for investment, innovation and job creation. A 2010 study by economists from George Mason University, Carnegie Mellon University, and the University of Virginia found that such regulations on broadband providers "would reduce economic efficiency and consumer welfare" and harm investment and innovation in the U.S. communications industry.

The president's signature health care legislation will also be responsible for further economic devastation and lost opportunity for workers if not repealed. CBO director Doug Elmendorf said last week that ObamaCare harms job creation with work disincentives caused by its Medicaid expansion, thereby reducing by about half a percent "the amount of labor that workers choose to supply."

And that's just job creation. The U.S. House Budget Committee estimates that the cost of implementing ObamaCare will result in $2.6 trillion in spending, which inevitably harms private sector expansion because the private sector's ability to grow is directly related to government's overall fiscal restraint.

Ask the 19,000 workers who don't have jobs thanks to the drilling moratorium about the government's ability to stifle growth with destructive policies. Bloomberg reports that in the three months since the moratorium ended, no exploration permits have been issued.

Bloomberg also reports the testimony of LSU professor Joseph Mason before a House subcommittee which detailed that, in addition to the moratorium's effect on job losses, workers have lost $1.1 billion nationally in wages, and there has been $350 million in lost tax revenues - all because of government intrusion into America's energy industry. Meanwhile, U.S. consumers are paying on average nearly $4 per gallon at the pump, though it should be said there that the weak dollar has played a major role; the weak dollar another economy killer.

Regulations aside, comprehensive tax reform is also needed to create the kind of economic boom realized by, for example, the Reagan tax cuts. The U.S. must not only simplify the incomprehensible tax code to boost revenues, but also make up for billions lost in the process of navigating the system. A study released on April 14 by the Laffer Center for Supply-Side Economics in partnership with Texas Public Policy Foundation estimates that U.S. taxpayers spend $431 billion each year just in compliance and administration costs because of the confusing income tax system.

House Budget Chairman Paul Ryan took a bold first step in his 2012 budget to halt profligate federal spending and allow private sector businesses to boost their economic investment. Ryan's plan reduced the federal corporate tax rate from 35% - the highest in the world - to a leaner rate of 25% to make U.S. businesses more competitive.

Rep. Ryan's budget also reduces the highest personal income tax rate to 25%, which in turn would reward the job-creating class with extra cash to invest and help grow the economy. The Heritage Foundation estimates Ryan's budget would create nearly 1 million private sector jobs in the next year, as well as start an economic ripple effect resulting in greater investment and a surge in labor demand. Total household net worth would increase by an average of $564 billion annually across the next 10 years, Heritage estimates.

So if the goal is to lower unemployment, create jobs, increase investment and boost federal revenue, how should it be done? By taking action against the rich who never "pay their fair share" until we kill the economic goose? Or should we get on board with Ryan's plan, loosen the choke-hold government has on private sector wealth, and help move the Obama-stagnated economy into a new era of opportunity and prosperity for all?