There are several things that need to be done with regard to the American economy. One is they need to lower the corporate income tax level to encourage direct foreign investment, and to discourage American businesspeople from going elsewhere to save money. Right now, with the economy so bad, businesspeople are looking for every advantage they can get. Why would they want to pay a higher tax, which cuts into their profit margin? Why would a society want to discourage its entrepreneurs from hiring employees or discourage the creation of jobs? It does not make sense.
Another thing that the Americans need to do is to stop the fair value method of accounting, which was partially responsible for the 2008 financial crisis. Fair value, or mark to market accounting, does not take into account the future valuation or price of the security because under this accounting method, securities have to be priced according to what they could get if they were sold right now. It does not take into account anticipated earnings. This results in banks being more reluctant to lend money, which leds to an illiquid market, which means that there is not much ready cash in the economy, which in turn leads to a depressed economy.
Another thing Americans should do in order to help their economy is to lower all taxes, not just the corporate tax. This will help small business owners be able to afford hiring employees to help their businesses grow. If this happens, the whole economy will benefit.Â
