The End of Prosperity: How Higher Taxes Will Doom the Economy--If We Let It Happen Book

This book can be a little dry unless you have a unique interest in how to dig the U.S. out of the 2011 recession and make it into the economic giant it once was. The steps to do so seem easy to do accept for the fact that little of our political culture seem to understand economics. Members of the United States House of Representatives, Senate and the President himself should read this book.

The book was written by economist Art Laffer, Stephen Moore and Peter Tanous. Laffer is famous for creating the Laffer curve. The Laffer curve represents the rate of taxation at which maximum revenue to the federal government is generated.

The steps outlined are simple. First, a low capital gains tax should be implemented because by doing this more revenue will flow into the federal treasury. The logic is easy to understand. When the capital gains tax rate is high people hold on to their stocks, when it is low they tend to sell more creating more tax money in the process. The authors have a chart to demonstrate this.

Second, eliminate the estate tax. Successful families businesses have been destroyed by this tax. It is estimated that this tax creates only 1 to 2 percent of federal budget receipts. One study suggests that it actually costs more to administer than it collects in tax receipts.

Third, free trade is essential. Of course, the U.S. is the world's largest consumer so we usual run a huge trade deficit. A lot of people think this is bad. Their study found the opposite. The higher the trade deficit grows the lower the unemployment rate we get. What seems to happen is that more goods we buy from a particular country the more likely they will invest in building factories in our country. Toyota manufactures 80% of their star car the Camry in the United States with two factories located in the U.S. This is a good example.

The final and main idea is for the implementation of a flat tax to replace the graduated income tax. The author calculates that the flat tax rate will be 12.1 % for personal income and 12.1% for business income. This would render enough money to run the federal government. It would eliminate the social security tax, corporate profit tax, estate tax and gift tax. It would allow very few deductions as well. This system would minimize tax evasion. It also pointed that many countries have implemented the flat tax and it revitalized their economies.

They would also like to see less regulation which hampers business. They are a little sparse with which regulations to eliminate but do emphasize that Hong Kong has little regulation is an enormously productive city. A good example though presented is that global warming regulations are crippling the economy. It is believed that the U.S west coast off shore area is the American Saudi Arabia of oil deposits. This region has been banned from drilling even before the global warming nonsense started by the U.S. congress in 1982. Of course, more oil would render cheaper energy which would help the economy tremendously.

The authors provide a lot of examples which justify their ideas. I have read Robert Reich's book "Aftershock" and think it is good but the program laid out in this book should be adopted first. Even Robert Reich agrees that this book is "influential and important."