Capitalism, left to its own, leaves a lot of people behind.
While working toward my undergrad degree in finance, I took a lot of courses in economic theory. During this time in school, I bought into the all the "Laissez Faire" / "Invisible Hand" / "Pure Capitalism" arguments aimed at curbing government intervention in the economy. As theories go these were very neat and tidy - that was their appeal. In the nearly 18 years since however, real life has taught me that in practice, capitalism, left to its own, leaves a lot of people behind. Consequently, I believe a balanced approach mitigating the harsh effects of free markets with regard to the lower socioeconomic classes through balanced government intervention is the best and most compassionate policy. The alternative is nothing more than giving the lower classes the "invisible bird". -|--
Regarding taxation, I am very much a "fair tax" (national sales tax) advocate. I strongly advocate abolishing the IRS and taxing "use" / "consumption" as opposed to income. I do believe, however, that items deemed "necessities" must be exempted from this method of taxation. A key benefit of this approach is that it provides an incentive toward savings as opposed to spending.
Regarding spending and the budget (and the corollary issue regarding the size of government), I believe that government has gotten too large (both federally and at the state level). I believe we could cut the size by approximately 20% just by eliminating wasteful, bureaucratic practices and programs. Finally, I believe in having legislative mandates for a balanced budget, but not a constitutional amendment.
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