Netanyahu Against the World: Cut Taxes

This is a guest post from http://www.israelnewsletter.com/

For the first time in months we have a real proposal that will help extricate Israel from the economic crisis. Instead of another proposal calling for spending billions of taxpayer dollars to build bridges that aren’t needed, PM wannabe Benjamin Netanyahu, has called for a comprehensive overhaul in the tax code calling for steep cuts in both personal and more importantly corporate income taxes.
Finally we have someone who understands that if citizens can keep more of there money, they can then invest, spend and save it according to their needs. The problem with all these other proposals is that with big time increases in government spending you end up taking money from individuals and they have less to create new wealth.
According to Globes: “Netanyahu said, “Over the course of four years, we will lower the top personal tax rate from today’s 46% to a level of 35%, and we will lower the top corporate tax rate from 27% to only 18%.”
Netanyahu added, “The tax cut will be spread over the entire term, and lead to everyone paying about 20% less than what they pay today”.
He also called for more privatization of government held monopolies like the electric, and water companies as well the ports.
With the world on fast track to socialism, it’s so refreshing to hear a leader speak with common sense, and a firm knowledge of what will actually save the economy.
I know that certain newly sworn in presidents believe that we all need to suffer in order to fix the economic issues that we all face, and that ‘greed’ was what caused all these problems, but ‘greed’ is what powers the economy forward. It’s not a bad thing but a good thing. the greed that Netanyahu talks about is about letting you and I keep more of what we earn, incentivize us to make more so that w can better our lives. Is that Greed? The fact is that as personal incomes rise, so do donations to charities. It appears that there is a correlation between making more and giving more. That doesn’t sound much like greed to me, and that’s the kind of personal sacrifice that should be encouraged.

Is It Win at All Costs for Netanyahu?

The Bibi haters are out in full force today, charging that PM hopeful Benjamin Netanyahu has thrown his 'free-market' principles to the wind and will do/say anything to get elected.

Nehemia Shtrasler writes in Haaretz: "It will be interesting to see where else Benjamin Netanyahu goes in his eager pursuit of voters' hearts. He wants so badly to sit in the prime minister's chair that he is even willing to scrap his entire economic worldview and masquerade as Histadrut chairman Ofer Eini."

He says that Netanyahu has given up his ideology in order to get elected. Calling for a broad pension safety net, increasing child allowances and a large increase in government spending, Bibi has basically moved his policies to be in line with those of national labor chairman Ofer Eini.

I am not a big fan of Shtrasler but he does make some good points. Instead of calling for more spending and basically abandonding budgetary discipline, Netanyahu should be out there championing lower taxes, and incentivizing entrepreneurship. After all, the real engine to economic growth is not bailing out billionaires, but it's by encouraging small and and mid-size business creation.

As for the pension safety net, Shtrasler is correct on the facts but wrong on the safety net. He says, " He knows that this "safety net" is a regressive, antisocial policy that no other country has adopted. And who knows better than he that the people have not lost anything in the provident funds, but have in fact earned a profit? From 2003 through 2007, these funds posted a very nice profit - 66 percent. Only this year have there been a loss - 20 percent. In other words, the gains far exceed the losses. So why should we be transferring money to people who made a profit?"

No question that much of this discussion is based on zero facts. Most pensions increased handsomely since Bibi opened up the system. I am not for a broad safety-net. We need to follow the Chilean pension model. Chile faced a bankrupt pension system, and they decided to privatize the system by allowing people to have individual savings accounts. But for those approaching retirement they were given a choice. Accept the new system or you could take a guaranteed pension from the government. Basically a safety net for those close to retiring. That's exactly what we should do here in Israel. For those 5 years away from retirement, give them the choice of accepting a guaranteed government pension, or letting it ride in a private account.

This is the kind of policy we need Netanyahu to speak about. We don't need him encouraging building a road or bridge that no one needs.