We need pro-growth, pro-business solutions
Which would you rather do, cut costs or increase revenues?
For business owners, revenues are offense while cost cutting is defense. And just like the football team up by 2 points late in the fourth quarter, going to a prevent defense results in more lost games than survival victories.
For all of the hand-wringing going on, we aren’t hearing enough pro-growth options being offered by Washington. Is this a foreshadowing of what the new administration and congress have to offer us?
Suggestion #1 – a capital gains holiday. Businesses are started by people willing to take a risk in exchange for a return. Elimination of the capital gains tax will immediately add up to 15% to the return formula.
Suggestion #2 – cut the business income tax rate. In the short run, this may not have much effect, because you need the profits to create the tax liability. But allowing companies to keep that tax money generates internal funds available for re-investment.
Suggestion #3 – eliminate the mark-to-market accounting rule. This forces organizations to write down the value of assets when a permanent devaluation has occurred. This has contributed significantly to the problems in the housing industry. This will immediately improve the balance sheet and create liquidity in the market.
We all know the devil’s in the details and work needs to be done. But Keynsian economics has not created long-term, sustainable economic growth. People are hurting and need help, but growth will solve the problems, hand-outs will merely maintain the status quo, or worse…
