Incentives work far better than penalties

Published 9:18 am Tuesday, March 4, 2014

My Point of View, by Al Arends

We are constantly hearing from Democrats about the unequal distribution of wealth and that the rich are getting richer and the poor, poorer. I admit that we have a serious problem, but is Washington the solution? Should we be penalizing the successful by continually raising taxes so that we build a bigger bureaucracy and more people become dependent on government handouts? Is there a better way where we create incentives for both business and labor to solve this problem?

Al Arends

Al Arends

For 14 years I was a teacher and basketball coach. We all know that there are five starters on a team and five to seven reserves. There were times when I needed six or seven starters to win, but the rules limited me to five. Now the question is, what was the difference between a starter and a reserve? They all had two arms, two legs, a body and a brain, but some performed better than others. It was basically broken down to two characteristics: 1. ability and 2. dedication or hard work. I had kids who had the ability but wouldn’t work hard enough and others who didn’t quite have the ability but became starters because they outworked everybody else.

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The question is: Did I penalize the starters because of their ability or work ethic or did I give an advantage or play favorites to a reserve so he would have an unfair advantage to become a starter?

I sure hope not. I hope that I gave them an equal opportunity to become successful. I did not take from one to give to another. I hope that I created an atmosphere that they earned the right to become a starter because of their ability and work ethic. I never penalized a kid for being successful.

In today’s environment in this country, we do penalize success by raising taxes and constantly criticizing success. Saying the rich should pay their fair share is a battle cry by Democrats when many are already paying 45 percent of what they earn. My warning to all of us is that if we continue this approach, it leads to socialism and will make us a second-rate country.

So are there other ways to solve this problem? Can we create incentives where the private sector helps to solve this problem? These ideas may not be the answer, but may get us to think about possible solutions.

Today, U.S. businesses pay the highest taxes in competing in the world economy. Let’s not lower that tax rate. Sounds like I am a Democrat, doesn’t it? Let’s not lower that tax rate unless incentives are created — a plan of incentives may look like this:

1. Business raises wages by 10 percent for all employees who are part of the lower 60 percent of the workforce. If the business does this, they will have their taxes reduced by 10 percent.

2. Another condition to qualify for the tax reduction would be to have a minimum wage of $12.

3. The second year a business could lower its tax bracket by another 10 percent if it gave the lower 60 percent another 10 percent raise and raised the minimum wage by a dollar.

4. After the second year, a company could keep the lower tax bracket if it continued to raise the minimum by a dollar until all employees’ wages were twice the poverty level. In today’s dollars, that would be about $38,000.

5. Reinstate the 10 percent investment tax credit program, which encourages businesses to buy and update their equipment. This stimulates the economy and puts more people to work.

6. Many multinational companies have large amounts of cash in foreign countries. If they bring it back to this country, it is highly taxed. What good is it doing for us when it is not put to use in this country? Lower the tax to 5 percent and bring it back here to put our people back to work.

Would these ideas work? I am sure there would have to be changes, but I believe incentives are better than penalties and problems solved by the private sector are much better than creating larger bureaucracies in Washington.

No one likes to see people and their children in poverty. Let’s empower the private sector to solve the problem. And no one likes to see people getting handouts from the government when they are very capable of working for their livelihood.

Let’s not criticize success, let’s encourage it. Let’s raise wages from the bottom up by using incentives rather than penalties. We may all be in the “starting lineup” if people get back to work and make good wages.


Albert Lea resident Al Arends is a member of the Freeborn County Republican Party.