Gohmert's Tax Plan Has Plenty of Merit

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Gohmert's Tax Plan Has Plenty of Merit - 12/17/2008 8:01:59 AM

celticlord2112

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Gohmert's Tax Plan Has Plenty of Merit

There is a real solution to the economic crisis out there. People just need to let their representatives know it exists and instruct them to vote for it.

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RE: Gohmert's Tax Plan Has Plenty of Merit - 12/17/2008 9:35:39 AM

Raechard

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I'm not a great believer in stimulating an economy with incentives for consumers to get them consuming again. A system has to find it's balance i.e. in the UK we cut VAT in pitiful way that will only add up to more government debt later and only tax payers pay off government debt with work. It's a vicious circle and we may as well suffer it sooner rather than later. Don’t put off till tomorrow the pain you can suffer today.

< Message edited by Raechard -- 12/17/2008 9:39:27 AM >

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RE: Gohmert's Tax Plan Has Plenty of Merit - 12/17/2008 10:43:03 AM

celticlord2112

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quote:

I'm not a great believer in stimulating an economy with incentives for consumers to get them consuming again.

The financial crisis is shaping up, at its core, to be a dramatic "deleveraging". One way or another, debt is going to disappear (it's either going to get paid off or wiped out in bankruptcy).

The quicker the deleveraging happens the greater the shock to the system. If the government must intervene, the most effective interventions will be of a type most likely to put a brake on things, to slow the pace down and give people, businesses, and markets time to adapt to a changing paradigm.

A "tax holiday" adds to people's disposable income, which they will necessarily dispose of in one of three ways:

1. Consumption: they will spend more, buy more, upping demand.....the usual stimulus arrangement.

2. Pay down debt: they will pay off a credit card, or perhaps get out of a hole on a mortgage. Paying off debt should increase liquidity and thaw frozen credit markets.

3. Save/Invest: Savings in a traditional savings account or other deposit instrument boosts banks capital reserves. Investing in capital markets would make capital available for companies to expand/invest in durable goods, et cetera. (alternatively, companies, by tapping equity markets, could similarly relieve themselves of debt as consumers might in option #1).

Tax holidays also benefit businesses directly by relieving them of payroll tax burdens--and for some companies that might be just enough to sustain a few jobs for a few more months. Every day/week/month a job is preserved is one less day of unemployment benefits that have to be paid out, one less day/week/month of government "make work" jobs that arguably is needed to keep folks off the unemployment lines.

A tax holiday will not end the recession. A tax holiday will ease money into markets where it is needed, and more efficiently than any other form of government intervention.

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RE: Gohmert's Tax Plan Has Plenty of Merit - 12/17/2008 11:07:40 AM

kittinSol

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You just want the extra money so that you can buy candy with it, don't you

.

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RE: Gohmert's Tax Plan Has Plenty of Merit - 12/17/2008 12:57:31 PM

celticlord2112

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quote:

ORIGINAL: kittinSol

You just want the extra money so that you can buy candy with it, don't you .

Actually, I would opt for #3--invest. I do have a company to run, after all.

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RE: Gohmert's Tax Plan Has Plenty of Merit - 12/17/2008 2:11:29 PM

Naga

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We already know this won't happen, CL, if the tax payers had a two month holiday, they would see what they are really paying to the government and what they could actually do with their own money. The whole system would collapse around their ears. They can't afford to let that happen.

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RE: Gohmert's Tax Plan Has Plenty of Merit - 12/17/2008 2:30:08 PM

celticlord2112

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quote:

ORIGINAL: Naga

We already know this won't happen, CL, if the tax payers had a two month holiday, they would see what they are really paying to the government and what they could actually do with their own money. The whole system would collapse around their ears. They can't afford to let that happen.

I agree the proposal is unlikely to prevail (although if enough people bombard their congressman and senators on the topic those odds could swing dramatically).

However, it is unlikely that such a perception would ever occur, because the money would not be given all at once. Rather, it would be an increment to their regular paycheck, and thus the full amount would be spread over time.

Incidentally, this time factor is another element of why a tax holiday is a superior stimulus vehicle. No matter how people use the additional discretionary funds, it is a steady force in one of the three channels articulated above, rather than a momentary shock. Sustaining employment levels with higher disposable incomes for any extended time frame will do much to slow down the pace of the recession--slower recession translates into milder recession.

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RE: Gohmert's Tax Plan Has Plenty of Merit - 12/17/2008 2:38:28 PM

Naga

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quote:

ORIGINAL: celticlord2112

However, it is unlikely that such a perception would ever occur, because the money would not be given all at once. Rather, it would be an increment to their regular paycheck, and thus the full amount would be spread over time.

I would like to think that it could change perceptions because it would hit people on two levels. The first is when they have the extra income they didn't have before and get roughly four paychecks to get used to it. The second would be when it expired and they were back to their former level of disposable income. That is when the real shock would occur.

But maybe I am simply dreaming. I know that I personally would notice the difference.

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RE: Gohmert's Tax Plan Has Plenty of Merit - 12/17/2008 3:22:19 PM

kittinSol

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quote:

ORIGINAL: celticlord2112

quote:

ORIGINAL: kittinSol

You just want the extra money so that you can buy candy with it, don't you .

Actually, I would opt for #3--invest. I do have a company to run, after all.

Riiiiiiiiiiiiiiiiiight... come on, I've heard about you and all the Hershey kisses

.

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RE: Gohmert's Tax Plan Has Plenty of Merit - 12/17/2008 5:21:13 PM

rexrgisformidoni

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I'd spend it on cheap whiskey and nose candy.

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