Our Mission Statement
Our mission is to educate the public about the adverse regulatory and tax
climate that affects the financial services industry, banking industry, and
small business growth. To do this, we have accumulated information and statistics
that explain the harms of excessive regulation, the benefits of looser regulation,
and why various federal taxes should be lowered or discontinued.
The Finance Group’s general concern is robust and sustainable
economic growth. We agree that capital accumulation - the ability to
finance the development of new products and services, finance the purchase
of plants and equipment, educate and employ a skilled labor force, and fund
research and development - is inextricably tied to the sustainable growth
of a market economy. Employers of all sizes rely on their investments to
provide the necessary means to undertake all of these important tasks. This
applies to everything from issuing stock and purchasing bonds to contracting
loans and filing tax returns – which all have important regulatory and tax
concerns attached to them.
Our group’s position on government regulation of these
markets and industries is that they should not be controlled as strictly
as they are currently. Said markets and industries should be subjected -
to a greater degree than they are currently - normal market forces and lower
tax rates.These sentiments directed our research. Our research goal was to
prove that there are connections between excessive taxes/regulation and lost
economic growth potential.
A Background To Our Research
By observing trends in the regulatory and tax environment
described above, we can make certain generalizations about the effects of
taxes and banking/securities regulation on the health of our economy.
After performing initial research we learned that our
original sentiments regarding tax and regulation had to be refined and separated
– that they are two different issues that affect “Finance” in their own ways,
and our efforts bifurcated from there. This resulted in two things. First,
our research has focused in general on capital accumulation, where we gained
an understanding of the important roles of corporate reinvestment and small
businesses in our economy. Second, it allowed us to determine how different
taxes imposed by the federal government on various economic agents and the
regulations on the securities and banking industries affect capital accumulation.
By engaging in this new research pattern, we also discovered
many pieces of legislation – some involving taxes explicitly, some involving
regulation of industry activity. Examining these laws and the repeals of
some of them revealed trends, which progressed over time, that have helped
us expose the economic benefits of lower taxes and decreased regulation.
Our research has indicated that many of the controversial
taxes that hinder reinvestment and capital accumulation have been deemed
ineffective and counterproductive. Repatriation taxes keep an estimated $300
billion to $500 billion overseas. The estate tax has “reduced the stock of
capital in the economy” by approximately $497 billion. It has been documented
that the Capital Gains tax has stifled minority business growth in the past
and severely affected the long-term stock portfolios and family business
ownership that many elderly people rely on as a steady source of income.
The Estate tax has also been proven to destroy opportunities to create or
preserve jobs, as family-owned business (as part of an estate) are typically
liquidated to pay estate taxes, in order to maintain control of other tangible
It has been documented that there are trends in foreign
direct investment (FDI) that are inversely proportional to personal and corporate
income tax rates in the United States. The United States saw an influx of
nearly $500 billion in FDI after a nearly 33% reduction in these rates. By
encouraging foreign investment, meaningful economic, research, and technological
partnerships could be created that not only spur economic growth, but also
create more congenial relationships between the United States and other countries.
That might be especially helpful now that many, unfortunately, question the
United States’ competency with respect to foreign policy.
The following segments are full of information that explain
the benefits of eliminating the Estate and Capital Gains taxes. They are
the taxes that not only have the greatest adverse effect on capital accumulation
and small business growth, but also create relatively small amounts of tax
revenue for the federal government. The federal government stands to lose
very little from their repeal, while the economy as a whole stands to gain
Regulation of the Banking and Securities Industries
Regulations put on the banking and securities industries
are generally thought intended to protect an uneducated yet enthusiastic
investment-making public. We have found that is not necessarily the case.
Our research indicates many regulations contradict popular normative economic
For instance, the average fee to become listed on the
New York Stock Exchange is approximately $67,000.00. This generated 1,428
corporate complaints in FY 2003, and approximately 1/3 of the firms that
complained filed for bankruptcy that year. This is a good example of the
“barrier to entry” problem that many economists ponder. There is no way to
be certain how much potential for growth could have been locked inside those
firms that were not able to make public offerings of stock. In addition,
the bankruptcies that resulted destroyed jobs.
Entrepreneurship is firmly tied to banking regulation,
a trend that is confirmed by a 2002 working paper released in August of 2003
by the St. Louis Federal Reserve Bank. The barrier to entry problem was has
also been greatly ameliorated in times of looser bank restrictions. Simple
economic theory dictates that a greater number of agents in a market (easier
access for entrepreneurs who may be carrying large amounts of funding from
interesting investors) increases competition. Increased competition spurs
innovation and beneficial price behavior – both of which have obvious positive
effects on economic growth.