Reagan said the more you tax something, the less you have of it. If you tax labor and the products of labor, you’ll have fewer jobs. If you tax sales contracts, you’ll have fewer goods and services for sale – and therefore fewer jobs. If you tax business contracts of all kinds, you’ll have fewer business transactions. We know what fewer business transactions implies for jobs.
We know how to increase the number of jobs. Everyone knows: we have to remove government from the labor market. Yes, we’ll always have taxes, but we can fashion tax policy so as to minimize the impact taxes have on business contracts. Labor and sales contracts are the key types of business contracts at issue here. If we reduce taxes on labor and sales contracts, we increase the number of contracts and therefore the number of people engaged in those contracts. If we reduce government interference with labor and sales contracts, we increase the number of contracts and therefore – I don’t really need to say it again – the number of jobs.
Here is a baker’s dozen of things we can do to reduce taxes on business contracts and eliminate government impediments:
- Decouple health care and employment.
- Decouple tax collection and employment.
- End the social security tax.
- End the tax for Medicare and Medicaid.
- Tax all employment at the same low rate.
- Give employers, contractors, and independent consultants complete freedom to form business contracts. Eliminate the tax distinctions and restrictions that govern contract employment.
- Tax all sales transactions at the same low rate. Eliminate the multitude of largely invisible taxes on sales contracts in favor of a single sales tax.
- End the minimum wage.
- End the permits, tax requirements, and other legal restrictions that make it difficult for entrepreneurs to start and grow a new business.
- For any new business contract, eliminate all taxes for six months. Let any two people or parties form a legitimate business contract without regard for tax or other legal requirements.
- End the requirement that employers pay for unemployment insurance.
- End the requirement that employers pay for workers’ compensation.
- End all government subsidies in the form of direct payments, tax breaks, and other allowances. Reduce government payments and special considerations to zero.
Naturally we don’t plan to do any of these things. Instead we will pass another stimulus bill, which reduces our ability to sustain job growth over the long term. We’ll continue our unhappy discussions about how to create jobs, our sense of pessimism about how to accomplish it. But we know how to accomplish it. The path to labor market freedom lies right in front of us.