Posted by
IndyBlogger on Friday, January 23, 2009 10:15:37 PM
We all agree the economy is in trouble and something needs to be done. The government should make whatever attempts it can to help the economy get back on track. The current plan to spend $1 Trillion is not going to work. What they are doing is paying off their friends. So don't be an idiot and fall for that. Really, this isn't even worth debating, the stimulus package is a payoff to liberal friends. Nothing more. It will make some people rich, get some people re-elected in the mid-terms, but do nothing for America. End of story, so read this blog 2 years from now and if that plan goes into place, you see that unemployment is higher and all we have done put more of our children’s future in jeopardy.
The answer on what to do is really quite simple. The government can do this easily and quickly and it will have an immediate positive impact on the economy and job growth.
I’m always surprised why this is so astonishing to people and how much debate there is over this. Bush cut taxes and tax receipts went up. Reagan cut taxes and tax receipts went up. When taxes are raised, receipts go down. Simple fact.
I propose a two-part plan that is extremely simple to understand. First cut the corporate tax in half. Business will pass the cost savings on to consumers. Consumers will gain instant buying power. The same level spending will actually translate into a demand for more goods and services, which will create jobs. More employed people will be able to spend more money. The liberal always say this is a tax break for the rich, but that is not true. It is a break for everyone who spends money. Yes business owners could make more money and some will. Some will still go out of business. Being in business is hard and risky and some will fail, but the good ones will grow, higher more people and add to the economy. This is also better than saving failing business, which are poorly managed like GM. The government can’t pick winners and losers because they aren’t business savvy people. They are politicians, not businessmen so reduce the burden on businessman and let them do what they do well. Grow their businesses and create jobs.
My second action is totally contrary in some ways. Create a Federal Sales tax and reduce raise the minimum amount people pay income tax on. The key to sales tax is that everyone pays it. Illegal immigrants pay it, criminals pay it, rich people pay it, everyone pays it. If you spend money you pay it. The dirty secrete about income tax is that rich people pay a lot but still less than you think because they can afford to avoid it. The middle class married family can’t afford it and they get slapped with the marriage penalty if both spouses work. By raising the lower limit of where you start paying income tax you relieve the burden on the lower to middle class. This is offset by the sales tax only if they spend money. This plan lets people take home more of their money and if they choose to actually try to save some money they can and they have more money to save. The sales tax encourages savings. Savings makes money available for investment, which is the heart and sole of the American economy. As part of this, I would consider shifting payroll taxes so they were not paid on the first $30,000 but went up to $200,000. The system needs the money, and I only suggest this because it might be acceptable to more parties, than getting rid of those taxes once and for all.
This plan achieves many goals. It reduces the cost of goods to consumers, creates jobs, provides confidence to businesses that must take risks, reduces the tax burden on the poor and the hiring of new employees, encourages savings, and could reduce taxes on the middle class. This could go into effect retroactive starting January 1, 2009. Businesses would respond immediately.
Tax receipts have gone up when taxes were lowered in the past, but lets say we run a deficit. What will the deficit be? More than $1 Trillion? We are about to throw money away, and then it will be gone. Once you spend the money, the demand dries up and its gone. Everyone just gets laid off again. Nothing sustainable is created. Creating business, with new jobs, new products that can compete on a global market, is how you move toward a sustainable economy.