In the 1979 film Breaking Away, bicycling enthusiast and racer Dave, played by Dennis Christopher, would tell his friends, family, and anybody who would listen that “the Italians are coming,” a reference to the Italian bicycling racing team that will be competing in a race in his hometown of Bloomington, Indiana.
Dave is so taken with the Italians that he begins to study Italian, listen to Italian music, and speak with a fake Italian accent. When he meets a pretty girl on campus, he pretends he’s an Italian exchange student.
So what does this have to do with tax cuts? Italy has a new Prime Minister. He’s Matteo Renzi. At 39, Renzi is the youngest prime minister in Italy’s history.
Under Italy’s parliamentary system, Renzi’s pledge “to cut labor taxes, free up funds for investment in schools and pass wide institutional reforms to tackle Italy’s economic malaise” got him the new government position.
He said that “‘if we lose this challenge, the fault will be mine alone,’ he told the Senate. The euro zone’s third-largest economy is in urgent need of potentially painful reforms and is weighed down by a $2-trillion-euro public debt.”
While not all of Renzi’s policies will be beneficial, he has proposed cutting taxes by 20 percent and reducing impediments to business development. He also called for spending cuts.
While Renzi is no conservative, he understands that high taxes are a disincentive to prosperity.
Italy has a long way to go to revive its economy. The nation is steeped in socialism. The mindset of the Italian people is similar to what’s going on here in the United States. There are too many people who want something from nothing, or to be more accurate, something from other people.
Maybe the GOP is watching the Italians.
“House Republicans are seeking to overhaul and simplify the national tax code with a proposal that calls for a cut in the top corporate income tax rate and a reduction of seven individual brackets to just two.
“The plan was devised by Michigan Republican Rep. Dave Camp, who heads the House Ways and Means Committee, and will be released on Wednesday after three years of work, The New York Times reports.
“Camp’s plan calls for cutting the top corporate income tax rate from 35 percent to 25 percent while taxing the two individual tax brackets at rates of 10 percent and 25 percent, and reflects overhaul goals spelled out in the Republican-backed budget.”
At least the Republicans are talking about cutting taxes, but it’s not enough. The income tax should be eliminated and replaced with a consumption tax. A consumption tax would be paid by any person who purchased goods and services in the United States. We have a huge tourist trade. Every time a tourist purchased something, the tax would be paid.
Coupled with the implementation of a consumption tax, often called the Fair Tax, there would have to be a reduction in spending.
Will any of this happen? Probably not in my lifetime. We’ll either get it the easy way or the hard way. The hard way will be a complete breakdown in the markets, and there won’t be a nation in the world that will come to our aid because they will be in the same financial vortex.