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Stop Income Tax For Two Months - 12/4/2008 10:12:10 PM

celticlord2112

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Instead of more "stimulus" spending, Representative Louie Gohmert (R-Tex) is proposing a two-month "tax holiday"--in essence, every working American would not owe or pay any income tax for January and February of 2009.

For those two months, every paycheck would be increased by amounts normally deducted for FIT and FICA. Employers of all sizes would see a payroll cost reduction equal to their portion of FICA.

The approximate amount of the tax revenue relinquished by the government is $350Billion, equal to the second half of the Wall Street welfare program known as TARP. Instead of funneling money to a chosen few interests and industries, however, this money would remain in the hands of individual citizens--to spend or save or invest as they saw fit.

RedState is hosting a petition drive to gather popular support for the idea, to hopefully persuade Congress to act on Rep. Gohmert's proposal.

If the economy needs a stimulus to get back on track, what better way then to directly boost the disposable income of every taxpayer?

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RE: Stop Income Tax For Two Months - 12/4/2008 10:31:15 PM

DarkSteven

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I'm totally confused.

The problem is that there was a credit bubble. People spent money they didn't have.

I'm not certain that the government spending money it doesn;t have, to let people spend more, is the answer.

The current government policy of "DO something! DO something! Doesn't matter if it makes sense!" scares the hell out of me. Bush can still cause considerable damage if Congress doesn't develop a spine soon.

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RE: Stop Income Tax For Two Months - 12/4/2008 10:41:16 PM

celticlord2112

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quote:

I'm not certain that the government spending money it doesn;t have, to let people spend more, is the answer.

Any "stimulus" package is spending of some form by somebody. The only questions are who spends, how much, and how do they get the money?

Instead of billions of ad hoc stimulus spending from Washington, why not just leave the money in the hands of individuals, and let them figure out where to put it.?

If they pay off that past due mortgage or delinquent credit card, that is "unclogging" credit and finance markets by definition.

If they put it in a savings account, those deposits shore up their bank.

If they put it in the stock market or other investment vehicle, that puts investment capital in the hands of businesses--for them to spend on equipment or other items.

If they buy some American made cars, that helps the Big three automakers directly.

Moreover, there is zero administrative overhead to a tax holiday. It takes no effort to "not collect" taxes.

If the government intends to take some action to stimulate the economy, this strikes me as better then yet another bailout.

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RE: Stop Income Tax For Two Months - 12/4/2008 11:10:55 PM

DomKen

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A tax holiday does nothing for the unemployed in the short term and no one would make significant hires based on a minor upsurge in consumption coinciding with such a holiday.

Bad policy from the usual suspects.

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RE: Stop Income Tax For Two Months - 12/5/2008 3:40:25 AM

NeedToUseYou

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I think that would be a band-aid at best, and doubt it will happen since people would reexamine how much taxes the government is taking out already. So, I doubt it, the last thing they want is for people to realize how much taxes they are paying.

I've come to the conclusion the only "bailout" I could support, and it goes against my basic philosphy but if we are going for bailouts anyway, what the fuck, is one targeted directly as small-mid size businesses in the form of near zero interest loans.

That gives you jobs, that gives people opportunity, that gives us new production, which will in theory put demand back in the mix for cars, mortgages, etc.... We have yet to treat the problem at all, the financials and the high end consumer items are a symptom, not the problem. The problem is we have to get producing shit. End of Story, and those that will be the most motivated, is the new small business owner, that will put 14 hours in a day in hopes it pays off eventually. The return on investment is best when you invest in new or existing small business, in my opinion.

< Message edited by NeedToUseYou -- 12/5/2008 3:43:05 AM >

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RE: Stop Income Tax For Two Months - 12/5/2008 4:27:34 AM

SilverMark

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Need to Use You....from your mouth to congresses ears PLEASE!....but, I am being totally selfish!....

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RE: Stop Income Tax For Two Months - 12/5/2008 5:05:59 AM

pahunkboy

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umm. how about suspending unfiunded mandates to the states and cities? while we are at it- lets buy every one a new car, (cheaper then a big 3 bail out)

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RE: Stop Income Tax For Two Months - 12/5/2008 5:07:09 AM

Truthiness

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quote:

ORIGINAL: DomKen

A tax holiday does nothing for the unemployed in the short term and no one would make significant hires based on a minor upsurge in consumption coinciding with such a holiday.

Bad policy from the usual suspects.

Except the point of the tax holiday isn't to "do something for the unemployed" in the short term. I'm dubious on the idea, but it's certainly a lot better than the travesty of a bailout they've done already.

< Message edited by Truthiness -- 12/5/2008 5:08:06 AM >

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RE: Stop Income Tax For Two Months - 12/5/2008 5:12:19 AM

pahunkboy

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at some point tho, workers will be needed to sweap up the turd droppings?

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RE: Stop Income Tax For Two Months - 12/5/2008 6:01:52 AM

celticlord2112

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quote:

A tax holiday does nothing for the unemployed in the short term

Actually, you're quite wrong about that. Unemployment benefits are fully taxable as income, but no taxes are withheld from benefit payments. A tax holiday would alleviate (and in some cases, eliminate) the tax "shock" many unemployed (and then newly employed) face down the road; any person receiving unemployment benefits who attempt to buffer that shock with savings gets a little more money, either to set aside or to spend as he or she sees fit.

If the unemployed need greater assistance, extend the tax holiday on unemployment benefits beyond two months.

Finally, a bit of additional disposable income in the hands of employers will preserve some jobs, and delay the loss of others--and the best way to help the unemployed is to slow the expansion of their ranks.

Beyond that, keep in mind that the FICA tax for social security is the single most regressive and economically distorted tax in the tax code. Eliminating that tax for even a short while benefits the lower income brackets immediately and directly.

No, a tax holiday is not a perfect measure--it is a better measure than any other short-term stimulus package Congress might cobble together.

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RE: Stop Income Tax For Two Months - 12/5/2008 6:29:01 AM

windchymes

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It's a nice theory, that people would take that extra money and bail themselves out of debt, but in reality, people would only do what they do every year when they get their tax refunds.....buy more luxuries.

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RE: Stop Income Tax For Two Months - 12/5/2008 6:33:35 AM

celticlord2112

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quote:

ORIGINAL: windchymes

It's a nice theory, that people would take that extra money and bail themselves out of debt, but in reality, people would only do what they do every year when they get their tax refunds.....buy more luxuries.

Possibly. But even consumption spending stimulates the economy. Stimulus packages from Congress boost consumption spending as well. The difference is this puts the stimulus directly in the hands of individuals to do as they see fit. It is more economically efficient, less costly, and less distorting than any other stimulus package. It is vastly superior to any bailout scheme.

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RE: Stop Income Tax For Two Months - 12/5/2008 6:37:55 AM

DomKen

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quote:

ORIGINAL: celticlord2112
It is more economically efficient, less costly, and less distorting than any other stimulus package. It is vastly superior to any bailout scheme.

Assertions without evidence.

The fact is that if we, as all signs indicate, entering a deflationary period then we cannot start applying fixes that don't put people back to work. Tax holidays will not do it.

Infrastructure projects and the like will.

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RE: Stop Income Tax For Two Months - 12/5/2008 6:46:14 AM

windchymes

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quote:

ORIGINAL: celticlord2112

quote:

ORIGINAL: windchymes

It's a nice theory, that people would take that extra money and bail themselves out of debt, but in reality, people would only do what they do every year when they get their tax refunds.....buy more luxuries.

Possibly. But even consumption spending stimulates the economy. Stimulus packages from Congress boost consumption spending as well. The difference is this puts the stimulus directly in the hands of individuals to do as they see fit. It is more economically efficient, less costly, and less distorting than any other stimulus package. It is vastly superior to any bailout scheme.

I actually was going to say something to that effect....that stimulus is stimulus, regardless of which economy was going to be stimulated! lol But for the most part, it's not going to be our own personal economies.

I just don't like to think of it as a "bailout" plan, because people are human. They're not going to suddenly breathe a sigh of relief because they receive a full paycheck for a couple of months, pay off their credit cards in full, and then suddenly begin living a more frugal lifestyle. We're just a materialistic society...some more materialistic than others, lol...and not much is going to get "bailed out" with that type of plan. Not with plasma screens getting larger and larger and the definition getting higher everyday and OMG, Costco has a $300 off coupon and FIOS is here!

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RE: Stop Income Tax For Two Months - 12/5/2008 6:48:13 AM

pahunkboy

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PEOPLE.

This is not a great mystery. argh.

Google federal reserve data st Louis.    and check those numbers.     Note the graph where the line looks wrong.   Note the debt owed, and the reserves coming in.

Get past the window dressing.   The system is disintegrating.   Headed for free fall.   Nothing policy wise will stop it. That day has passed. Remember, we were woefully broke in 1980.   Remember?

In the years since then, government has NOT grown smaller.   Real national product, in real numbers, stopped growing in 1968.    They find more ways to describe the data, a rose by any other name.

Any time there is a crises, there is a corporation that has the solution, hence makes money.   the psychopath mode of corps, and of society (see war on blank) means created crises are good for the profits of multinationals.

I personally do not want the government to fix anymore problems. I can not afford it.

Your thoughts are well intentioned, but collectively, us peons must collectively get at the root of the problem.

Wealth is never created for a society via a printing press.   Quite the opposite.

The supposition is that we the people have any real voice in governance. Get real, we don't.

The answer, and write it down, is in a word;   "NON-compliance"

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RE: Stop Income Tax For Two Months - 12/5/2008 6:48:41 AM

celticlord2112

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quote:

Infrastructure projects and the like will.

The earliest an infrastructure package can yield results is 2010--and that is being generous and assuming government bureaucracies won't gum up the works and slow things down (a dangerous assumption under the best of circumstances). First the money has to be allocated by Congress, then the money has to be distributed to the states, then the projects have to be identified. Then comes necessary design and planning phases--roads and bridges do not just magically come together.

Infrastructure spending is a great idea, but what will sustain the economy until that gets going? More handouts and bailouts from Congress?

If they keep bailing out their chosen industries, there won't be any money left for any infrastructure spending.

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RE: Stop Income Tax For Two Months - 12/5/2008 8:18:38 AM

DomKen

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Bull. There are an immense number of infrastructure projects that could start as soon as money became available. In Illinois there are at least a dozen being held up simply because the feds under GWB failed to distribute funds that had been allocated.

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RE: Stop Income Tax For Two Months - 12/5/2008 9:30:11 AM

Termyn8or

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I don't think it would do much if any good. Getting a check and not writing a check amount to the same thing.

T

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RE: Stop Income Tax For Two Months - 12/5/2008 9:57:08 AM

UncleNasty

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quote:

ORIGINAL: DarkSteven

I'm totally confused.

The problem is that there was a credit bubble. People spent money they didn't have.

I'm not certain that the government spending money it doesn;t have, to let people spend more, is the answer.

The current government policy of "DO something! DO something! Doesn't matter if it makes sense!" scares the hell out of me. Bush can still cause considerable damage if Congress doesn't develop a spine soon.

How about this one - Don't just do something. Stand there!

CL, the Fed Gub already forces employers to be unpaid accountants and debt collectors on its behalf. Seems like throwing this monkey wrench into the gears will cause some signifcant uncompensated for expenses to the employers again in the form of confusing modifications to the system they are familiar with.

Who will be held liable for any errors, mistakes or fraud?

Seems more like political grandstanding than anything legitimate.

OHUN

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RE: Stop Income Tax For Two Months - 12/5/2008 10:38:15 AM

celticlord2112

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quote:

Seems like throwing this monkey wrench into the gears will cause some signifcant uncompensated for expenses to the employers again in the form of confusing modifications to the system they are familiar with.

Not really. Large companies use payroll systems (or outsource) that work off percentage calculations--updating the tax tables is a routine exercise for their staff (have been a payroll clerk in a previous life, and have done this exact exercise several times).

Smaller companies that compute by hand....well the computation just got a whole lot easier.

You're not changing the system....you're merely adjusting the percentage, the changing of which is part of that system. Whether you tweak a percentage up or set it to zero the task is exactly the same.

As for the idea of doing nothing.....if the government were capable of doing nothing, we wouldn't be in this mess now. The financial crisis came about because government can't bear to do "nothing," it always has to do "something."

If government is not going to just stand still, at least let's have it do something that provides stimulus where it can generate the most activity--in individual taxpayer's wallets.

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