Take off the Gloves

There is good news and bad news in our economy today. First, the bad news: We are immersed in the worst economic situation of our lifetimes. As a nation, we have been on a spending binge for decades, spending money that we have not earned on things that we could not afford, and on terms that we could not pay for, to impress people that we don’t care about that much in any case.

Now, it’s all over. As Stein’s Law says, “What can not go on indefinitely, won’t go on indefinitely.”

After several decades of affluence, Americans fell in love with the idea that they were entitled to have the highest standard of living in the world while working at half-speed, wheeling and dealing, flipping properties and generally trying to “get-rich-quick.” Now, it’s all over, and it’s not coming back. We are living in a new reality.

The good news is that the US economy is still the most entrepreneurial in the world. Americans start more businesses per capita, register more patents and copyrights, create more breakthroughs in every field, graduate more students, and are simultaneously more positive and optimistic about the future than people in any other country.

The key to reversing our negative economic situation is for the federal government to allow the business community to “take off the gloves” and begin investing, producing and creating new wealth and new jobs.

The current federal bail-outs and massive spending plans are imposing a huge financial burden on our children and grandchildren. The latest estimate is that each person in America has been saddled with an additional $48,000 in debt that they will have to pay off out of their paychecks and through their taxes in the years ahead. The tragedy is that virtually none of this big spending will do anything to stimulate job and wealth creation.

Almost every dollar has been allocated to pet programs, give-aways, earmarks, pork belly projects, and social welfare. None of the money invested in these areas will create any real jobs. And most of the spending doesn’t start until 2010 and beyond.

Government has no money. The only money government has is the money that it takes away from the private sector, and from individual taxpayers. Government creates no wealth. It merely redistributes wealth away from the people who earn it toward the government sector.

For every job that government creates, it must destroy approximately 1.4 jobs in the private sector.

Government jobs are those jobs that, by definition, nobody is willing to pay for because nobody values the results or outcome of those jobs.

Jobs in the private sector only arise when people produce products and services that people want and are willing to pay for.

The current administration seems to be obsessed with taxing the successful and productive people in America. These people are also the only real “job creators” in America. If you want to create more jobs, reward the people who create more jobs.

There is a simple solution to the current economic situation: abolish corporate income taxes. Abolish capital gains taxes. Abolish taxes on dividends.

Instead of taxing productive people so heavily that they have no money or incentives to invest and create jobs, remove these tax burdens completely.

The result would be a complete turnaround of the US stock market. Companies and their stocks would increase in value overnight. The monies lost in 401(K) plans would be largely recovered and recouped, thereby saving the retirements and dreams of millions of Americans.

Companies do not pay taxes anyway. Companies only collect taxes from their customers, or reduce the wages that they pay to their employees, and pass them on to the government.

Today, very few companies are earning any profits so eliminating taxes on those profits would cost the government almost nothing. On the other hand, it would signal to America, Americans, and the rest of the world that the US is now the most attractive country in the world to start businesses, and to invest and create wealth. The natural energy, ambition and determination of the American people can and will bring us rapidly out of this recession if entrepreneurs, businesses people, investors and wealth-creators are simply encouraged to “take off the gloves.”

Brian Tracy

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About Brian Tracy — Brian is recognized as the top sales training and personal success authority in the world today. He has authored more than 60 books and has produced more than 500 audio and video learning programs on sales, management, business success and personal development, including worldwide bestseller The Psychology of Achievement. Brian's goal is to help you achieve your personal and business goals faster and easier than you ever imagined. You can follow him on Google+, Twitter, Facebook, Pinterest, Linkedin and Youtube.

  • http://www.yourstake.com Darron

    Wonderfull!! this is what I called BRILLIANT..

  • http://markethoundmonthly.blogspot.com/ Eric Bennett

    Hello Mr. Tracy.
    I am writing from oil rich Calgary, Canada, and have been following your blogs and newsletters for about 4 months now. I must say you have a wonderful way with words when explaining difficult topics, such as this one regarding the abolishment of taxing the successful and truly entrepreneurial.
    Mr. Forbes has been an advocate for these changes for years, and I fear that short of him winning an election, the powers-that-be will not be removing their sticky hands anytime soon.
    Taxes and logic haven’t had a history of mixing well together, and I think that true competitive advantages will go to those countries that are friendlier to those who take risks and dare to succeed. (Unfortunately, that means a general attrition from some our best and smartest people towards those countries who are more accommodating.)
    Maybe this is another indication that the natural balance of power is shifting…

  • Joseph

    Abolishing capital gains and dividends taxes would incentivize people to throw money back in the stock market. But isn’t that part of the problem rather than the solution? As you said, we need to invest in real productive work, producing products and providing services. American economy had been driven by debt in pursuit of fake wealth, wealth in the form of real estate and financial instruments. Real wealth comes from work.

    As you said, America has more copyrights, trademarks and patent than any other country. Corporations that own these intellectual properties do generate huge amounts of corporate profits. However, these corporations do not generate jobs for Americans: these corporations ship the manufacturing, servicing jobs abroad where labor and wages are cheaper. America has become a nation where a minority makes obscene amounts of money from intellectual property rights while the vast majority see their jobs outsourced abroad, creating ever greater wealth gap and social inequity.

    Government spending is better than tax cuts at this stage of the crisis. People would save the tax cuts rather than spend them because everyone is worried about the future. Goverment spending will get some economic activities going and later when people are more likely to spend their taxes, the goverment can cut its spending and increase tax cuts.

  • http://www.CheyennePropertyForSale.com Vicki Graham

    I believe I am quite fortunate to have my own business and trust in “me” to succeed.

    I strive to think of new ways to meet the needs of the existing economic situation and turn it into a positive bridge to a new or existing business.

    I don’t believe there really is not a “get rich quick” way; just hard work, diligence, creative thinking, and looking at the big picture to see where “you” fit best.

    Mr. Tracy you are a creator of inspiration and a man of great wisdom.

  • AKIN BENJAMIN

    You have reduced the meltdown to mincemint with these brilliant ideas Brian.I hope you have a way to communicate this to the top echelon of Government in the U.S.
    As for those of us in Africa the heat is just begining but we hope that Governments will relize that it has no business in business,and just play the umpire it is suppose to play in the free market arena while removing its gloves to do extra job in its area of core competence which is CREATING AN ENABLING ATMOSPHERE FOR PRIVATE SECTOR DRIVEN ECONOMIC RECOVERY BY ALL MEANS POSSIBLE.I am reading your book ‘GETTING RICH YOUR WAY’as i am writing,and i want to thank you for showing me that the secret has always been A RENEWED MIND THAT DARES TO BELIEVE AND SAY ‘I CAN’. THANKS Mr Tracy

  • http://www.motivational-well-being.com Kevin Ngo

    I truly believe that in any challenge or crisis, there will always be opportunity. The problem is that only the well-informed are able to find these opportunities.

    So of course we’ll have people/companies who will exploit this fact and sell people “the secrets” to capitalizing on these “rare” opportunities during this crisis through “get-rich-quick” schemes.

    I, myself, am being laid off in about 2 weeks but I’ve seen this as an opportunity to really work on pursuing one of my passions. When else will I have this much time right?

    Everything comes down to what we decide to do with the situations and circumstances life throws at us. I say, When life throws you crap, instead of complaining about how there’s crap all over you, catch it and make something out of it.

    Thanks for doing what you do Mr. Tracy.

  • David Corbin

    I couldnt agree more. And, as you indicated in previous modules, we have to take an objective look at what is working and what’s not- and deal with it. My clients who have the character to ‘get real’ and face the issues as opposed to ignoring or hiding from them (because it’s down right tiring to confront all the issues, especially when we’re trying to keep the boat afloat, are the one’s who thrive in tough times.
    In fact, as you know Brian, I took this idea and wrote a business parable about it because it is the most effective of all the lessons I’ve shared with businesses. Wiley will publish and distribute it in Sept. It’s called, and you’re gonna love this: Illuminate: Breakthrough Results Using The Positive Power of Negative Thinking. The model has three parts, Face It, Follow It and Fix it.
    Like you say, we have to confront.. and that’s the lesson in this book. So, as they say, ‘great minds think alike!!!’

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