A libertarian plan to save the U.S. economy

We are not recovering from a recession. We are actually falling deeper into a depression. The spin, propaganda and wishful thinking from Barack Obama, Congress and the Fed are wearing thin on the average American.

There may be signs of a recovery for big business, due to stimulus and bailouts, but not on Main Street, where the average worker and small business owner lives.

What we need is an economic plan aimed at small business owners.

The president’s policies of tax and spend are killing jobs, destroying confidence and wiping out small businesses. Without a recovery for small business, there can be no recovery for the U.S. economy.

So I propose a plan that can save small business. In the 1980s, Ronald Reagan pushed through Congress the largest tax cut in U.S. history — a tax cut aimed squarely at small business. That one brilliant stroke of capitalist incentive turned a deep economic crisis into an economic boom. It ushered in the greatest economic expansion in world history, leading to 25 years of virtually uninterrupted economic success.

There is still time to save America. Ronald Reagan proved that a giant tax cut aimed at the most important segment of any economy — small business owners, the people who actually pay the taxes and create the jobs — can quickly turn around even an economic disaster. Here is my simple, four-step plan to motivate small business:

• Step 1: Create a one-year national income tax vacation. This plan aims tax relief squarely at the people who make all the difference in a capitalist society: the taxpayers. My plan allows everyone in America who already pays taxes to keep 100 percent of their own income for one year. Stand back and watch the economic explosion created when the taxpayers and small business owners spend it (helping retail sales), invest it (helping stocks and real estate), use it to pay down their mortgages (helping banks and ending the foreclosure crisis), and use it to start businesses in record numbers (creating jobs).

The cost of this income tax vacation is a measly $1.2 trillion. Obama spent trillions on bailouts and wasted stimulus, all of which created zero jobs and did nothing to improve the economy (it did however reward his voters and contributors — unions, government employees and entitlement addicts).

• Step 2: Eliminate capital gains taxes permanently. The key to the success of our economy is small business investment. A temporary capital gains cut or elimination will not work. Small business owners and investors need security and certainty.

There is only one way to spur small business investment and expansion in the middle of a depression — eliminate capital gains taxes permanently. This would motivate people to invest in a way that will create jobs — exactly what we desperately need them to do.

If there are no more taxes on capital gains (and investment income of all kinds) older Americans could afford a much higher quality of life in retirement. Anyone could retire on half the amount of assets because interest, dividends and investments would be tax free. Think of what older Americans would do with that extra money — fuel the economy.

This step also allows America to compete on equal footing with China, who has zero capital gains tax.

• Step 3: Turn immigration from a drain on the economy into an economic boom. Immigration could be the most important issue of America’s future. Studies prove that immigrants fare financially better in this country than native-born Americans.

Now, however, illegal immigrants are draining the American economy. They cost taxpayers billions in welfare, free education and health care. Let’s first secure the borders to dramatically reduce future illegal immigration. At the same time let’s offer instant residency and an easy, quick path to citizenship for skilled, educated and financially secure immigrants, which will help trigger a turnaround to small business and the American economy.

Specifically, any immigrant who invests $250,000 into either a home or a small business should be granted instant residency and a path to citizenship. This plan is simple: any immigrant that brings money, skills and resources to start businesses and create jobs will be instantly welcomed into the land of opportunity.

This group of immigrants will create an economic boom, add jobs, pay taxes and end the foreclosure crisis.

• Step 4: Follow the Nevada model to legalize and tax sin. Conservatives must stop embracing the Nanny State. We’re broke • we simply can’t afford it. Let’s instead follow the Nevada model by allowing citizens to do what they want to do, as long as it involves consenting adults, and doesn’t harm anyone else. It’s called personal freedom.

This simple plan could quickly turn around the U.S. economy and save capitalism. It’s time to restore the American Dream.

Wayne Allyn Root, the 2008 vice presidential candidate on the Libertarian ticket, is a Fox News regular guest and the author of, "The Conscience of a Libertarian: Empowering the Citizen Revolution with God, Guns, Gambling & Tax Cuts." He writes from Henderson.