What Mitt Believes In (complete with fun parables) part 1. Taxes and regulation.

If taxes and regulatory policy seem unbearably boring to you, skip straight to the "explanation for a 9 year old." It's a little more fun. This (like the others) turned into a LONG post. oops.

I've been talking a lot about Newt lately, for good reason.  Our party is turning into a giant hypocritical joke by even giving the guy a second chance.  But I want to give that a rest, and focus on something else.  In debates and on talk shows, Mitt has gotten heat from people that say they "don't know what he stands for." I wanted to make that all a little bit more accessible to people that don't necessarily understand politics.    I want to preface this by saying that I am talking about the most important and pertinent positions, namely those regarding the economy and job creation.  These are taken from Mitt's Believe in America: Mitt Romney's Plan for Jobs and Economic Growth. 


He has divided his economic plan into 7 main parts.  This post will explain just the first 2 of the 7, which I think are the most basic principles of job creation and catalyzing the economy.  This is a paragraph taken from Mitt's plan's introduction.

There’s much that needs to be done and done quickly to put America back 

on the right path. I have formulated a comprehensive and integrated plan that 

focuses on seven areas where reform is urgently needed: taxes, regulation, 

trade, energy, labor, human capital, and fiscal policy. Change in any one of these 

seven areas would be important and helpful by itself. Taken together, they hold 

the potential to revitalize our economy and to reignite the job-creating engine 

of the United States

Taxes- Maintain tax rates, but reduce tax rates on savings and investment.  Eliminate "the death tax" which is the tax on the possessions/estate that are passed on when a person dies. The long term goal is to pursue a flatter, fairer, simpler structure.  Several of the candidates, namely Cain, Huntsman and Perry have talked about the need to "simplify the tax code." These particular ideas will work towards that goal, but he is realistic in not stating outright that a "flat tax" like that in Cain's late "9-9-9" which other candidates and economists revealed to have the potential to do more harm than good. Mitt plans to affect corporate taxes by lowering the corporation income tax to 25.  It currently has a top marginal rate of 35 percent, with even the lowest rate being 15 percent.  The largest corporations and businesses have to give back over a THIRD of their income to the government.  If that doesn't discourage business, I don't know what will. The tax foundation describes that the corporate tax system puts us at a considerable disadvantage to other countries, and the Organization for Economic Co-operation and Development explains that the best way to create a business friendly environment for investment is to lower corporate income taxes. Mitt took a lot of heat for saying "corporations are people," but the people needed to invest in corporations and business around the country ARE people, and they are the hope for reigniting the fire of the American economy.  While other countries have decreased corporate income taxes in order to keep investment competitive, we have stayed close to the same since the late 80s. And as Obama had made it a personal mission to attack big business and corporation, it is no wonder that these tax rates have remained the same.  His inaction on this has crippled our competitiveness in the global economy.

Explanation for a 9 year old
In an episode of "The Office," accountant Oscar must explain to manager Michael Scott what a surplus is.  After explaining it in official terms, Michael says "explain it to me like I was a ten year old." Oscar explains it using an analogy of children and a lemonade stand.  I will explain Mitts tax ideas similarly.  "Imagine you are opening a lemonade stand.  You need some money to buy supplies, so your friends all get together, gather their pennies, and come up with 5 dollars to buy lemons, sugar, and paper to make signs.  You set up your stand, and make ten dollars.  Ten WHOLE DOLLARS!  Your little sister set up an identical stand down the street, and she made 4 dollars.  As you were cleaning up, a man that lives on the street where you ran your lemonade stand approaches and says that you have to give him some of the money you made.  Since you made so much, you have to give him 3.50 cents.  (35 percent corporate income tax) Your little sister had to give him 1 dollar (25%) Obviously you are still excited about the money you've made, but when you go back to your friends to give them their share, everyone is a little bit disappointed at the 3.50 they lost from you and the dollar they lost from your sister.  The next time you want to play "lemonade stand" they decide they would rather take their pennies and make a lemonade stand on a different street where there isn't a man that will take so much of your income.  Bummer, you lose business, no more lemonade stand.  America is like you and your street.  You are not competitive with other streets that have more relaxed corporate income taxes, and people are not willing to invest in a place where the return is so small.    That affects jobs, (if you got to keep all ten dollars, and your sister all 4, maybe another one of your friends would have opened ANOTHER lemonade stand down the street and the three franchises combined would make BIG money the next time a hot day came around) Instead, your friends have found streets where they only have to pay residents 25% of everything they earn.  You would have been able to keep a whole dollar more on one of those other streets!   Mitt's plan would take our corporate income tax rate down to 25, the average that our competitors are at according to the aforementioned OECD.  This will massively aid domestic corporate investment, and foreign investment, both of which are crucial to the economy of a world power.

regulation- The regulations imposed by the Obama administration through Dodd-Frank and "Obamacare" impose what Mitt calls "stealth expenses" and they act as a "brake on the economy at large." The total price tag of government regulation was put at 1.75 trillion dollars annually, and small manufacturing plants carry a burden of $28,000 per employee. This takes the cost of everything up, and in the end it makes sense for investors in manufacturing and companies that require a great deal of manufacturing to take their businesses overseas, where work is done for much cheaper because of lighter regulations.  In a Steve Jobs biography set to come out soon, Jobs is quoted telling President Obama that he will be a one term President because government regulation and unions made it difficult to build factories in America when places like China were so much cheaper.  The Obama administration has effectively made "made in America" obsolete.  Mitt's plan is to roll back these regulations, starting with Dodd-Frank and Obamacare.  He will then initiate a review and elimination of all Obama-era regulations that unduly burden the economy.  Environmental regulations must be properly account for regulatory costs, and gives new companies lead times before they are required to comply with environmental regulations.  A regulatory cap of 0 dollars will be imposed on all federal agencies. All major regulation will require congressional approval and the process by which regulations are made must be amended.  Mitt understands that regulations that protect the environment, the American people, and the free-market economy are important, but he also understands that there is such thing as too many regulations, and that hurts the economy and the ability for businesses to grow and develop.  President Obama's regulations have had a tremendously negative effect on job creation and economic recovery.

explanation for a 9 year old: lets go back to that lemonade stand analogy.  What if, in addition to the amount you had to pay to the man for taxes, you also had to pay the city for letting you work on their cement, you had to pay for extra clean water, you had to pay to make sure the table and the pitcher you used were sturdy and safe, and about twenty other things.  You watch as the 6.50 you were left with drops even lower, and you see your profit almost disappear.   Guess what.  Any friends that still wanted to build lemonade stands on your street are definitely gone now.  Sad day.  No jobs, no friends, no moneys.