Hearing Of The Subcommittee On Income Security And Family Support Of The House Committee On Way And Means - "Safety Net's" Response To The Recession
Mr. Chairman and members of the Committee, thank you for allowing me the time to address you this morning.
As we sit comfortably in this historic building Americans by the millions search for a job. These fellow members of our American family are not in search of a new government program; they are not asking for another bailout, and most assuredly they do not want their government to steal any more from the next generation. They simply want to work and earn a living.
So how do we do this? How do "we" create jobs? Surely it is a question asked by every member of Congress regardless of political persuasion. The answer is simple, but perhaps very difficult to admit for those of us who stand before the voters and ask for validation.
We must first recognize "we" don't create jobs, just as much as "we" don't create wealth, and "we" don't create happiness. The American people do all these things and for more than two centuries have done them quite well despite increasing government interference.
The simple truth is that Government cannot give anything it has not taken first. As former Massachusetts Governor William Weld once said, "There is no such thing as government money - only taxpayer money".
The creation of government jobs, or government anything, is nothing more than the destruction of private sector jobs.
Surely no one among us is suggesting that a welfare check, or food voucher, or even an unemployment check is preferable to a real honest-to-goodness paycheck.
I suspect this is the real issue at hand, whether the government spends more money it doesn't have to provide the temporary illusion of "safety" or whether the government trusts the very Americans that put us in office to solve the problem as they always have.
I suppose we can pat ourselves on the back for taking money from Peter to give to Paul. Maybe in our wisdom as elected officials we thought Peter had too much and Paul not enough. But perhaps there is a better way. What if Peter hired Paul? Wouldn't this be the best possible scenario for everyone?
To make this happen a million times over, we need government to get out of the way.
A groundbreaking study of state-by-state economic growth was recently released by world-renowned economist Dr. Arthur Laffer and Stephen Moore, senior Economics writer at the Wall Street Journal.
Dr. Laffer and Moore proved beyond a doubt the lowest-taxed states enjoy enormous economic growth benefits when compared to the highest-taxed states. Based upon original work by Dr. Richard Vedder of the University of Ohio, Laffer and Moore showed that between 1998-2007 the nine lowest taxed states had an astounding 89% greater job growth and 32% greater income growth than the nine highest taxed states.
Dr. Barry Poulson of the University of Colorado similarly studied the economic policies and conditions of states between the years 1964-2004. He concluded that higher tax rates have a significant negative impact of economic growth.
Simply put, creating jobs and creating wealth is the only way out of this economic struggle. The fundamental laws of economics prove that economic growth occurs at a more rapid rate with fewer restrictions (lower taxes) as opposed to more restrictions (higher taxes).
Ask any small business owner what needs to happen to create more jobs in America. I will bet the answer includes less taxation, less regulation, and less litigation. I have held a number of jobs in my life and not one of them came from another unemployed person. Every one of them came from a business owner; someone who was willing to exchange their resources for my labor.
If we want more jobs in America we must empower business owners to create them.
If you force businesses to pay higher unemployment taxes, you will have higher unemployment. If you force businesses to pay a new health-care payroll tax you will have higher unemployment. If you force businesses to pay new carbon emission taxes you will have higher unemployment. If you raise the Captial Gains tax on businesses you will have higher unemployment.
History is replete with failed attempts at taxing economies to prosperity. Winston Churchill captured it best when he said, "We contend that for a nation to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle."
The problem of too few jobs cannot be answered by punishing the very businesses that create jobs.
I offer an alternative idea from my home state of Georgia. Reduce the tax burden on those businesses that hire the unemployed, particularly the long-term unemployed. Make it less costly to start and maintain a business. And eliminate silly rules that reduce working capital.
This year the Georgia Legislature introduced the Jobs Opportunity Business Success (JOBS) Act of 2009, letting the world know that Georgia is open for business and investors. The impetus for the JOBS Act is to create jobs, open new businesses, and encourage investment.
The JOBS Act consists of seven "pro-growth" measures created to truly stimulate our economy; through the private sector, not government:
* Tax credit against unemployment insurance for hiring a person currently receiving unemployment benefits
* Tax credit of $2400 for hiring a person who has been unemployed for at least 4 weeks
* Elimination of the Georgia Inventory Tax on Business
* Elimination of the Georgia Intangible Tax on Business Assets
* One year business start-up holiday -- start-up fees waived
* 50% reduction in Georgia Long-Term Capital Gains Tax
* Gradual refund and elimination of all Georgia Sales Tax Deposits
Let's consider a couple of points and their contributions to job growth and a strong economy.
History demonstrates that by reducing the capital gains tax, the economy grows and jobs are created. According to Economist Stephen Moore of the Wall Street Journal there have been five changes to the tax rate on Capital Gains since 1978. Presidents Carter, Reagan, Clinton, and Bush all cut the tax rate on Capital Gains and in every instance, tax revenue increased as a result of the lower rate. The American Council for Capital Formation noted that after the 1997 federal capital gains tax cut, the S&P 500 increased 30.1 percent over the subsequent two years. Twenty-five percent of that economic growth is directly attributed to the capital gains tax cut.
The best way to stimulate the economy is to get the American people working. By providing incentives for businesses to hire those off of unemployment, we can turn a government dependent into a self sufficient individual who can invest in our economy.
Whether it's the first few trillion dollars the federal government has taken from the taxpayers of today or the record breaking $1 Trillion we are borrowing this year from a future generation of Americans -- spending these amounts of money, regardless of the urgency we attach to it, is becoming economically catastrophic. The fact is, every time government takes a tax dollar it must come from an American who earned it from the fruits of his or her labor. Growing our way out of this recession is the most effective solution.