Day Four – Time for a vacation..
On Day 4 of this 7 day plan to fix the economy we declare a 6 month Federal Tax Holiday. What would you do with an extra $1000 per month of income? If you earn $50K per year that is about what you would gain with a Federal Tax Holiday. No FIT, No FICA. If that money was poured into the economy by consumers I can imagine where it might go. It would increase production, increase employment and we just might be on our way out of this mess and it would cost the government (us) less than the supposed ‘stimulus’ money that was already spent via government programs. I don’t know about you but I don’t think we need another sidewalk or median on those ‘shovel ready’ projects or another bank merger into something too big to serve.
That money just might go to a new car purchase or savings for that home you have always wanted. Saving the additional money for the entire 6 months would be enough to purchase a $150K home via FHA financing and at the current rate of 4.5% that works out to a house payment of about $800 per month. Could that change the economy? I think it could.
BTW, this was suggested in 2008 by Rep. Louie Gohmert (R-Texas). Seems to me he has some pretty good ideas.
I have to say I don’t expect everyone to agree with this idea. We are a country divided about 50/50 on policy statements. We have been that way for years. My thought is that this is not something we will ever fix as long as we think we have to win and the other side has to lose. It is not a win – lose sort of problem.
I would suggest it is a tension that must be managed. It will never go away. We can’t spend our way out of it with social programs and we can’t cure it with social anarchy either. I don’t think however that it can be managed effectively by a Federal Government or program. This is a local problem and needs to be handled by local people. We should at least move it to the State level if not the county. Charity has a lot to do with it too. If the Feds are not taking as much of our money we have to take a look at what we do with the extra.
A simple plan that I have seen is something we can call 10/10/80. Give 10%, save 10% and spend the rest on our needs and wants. That 10% we give can be used to encourage the compassionate use of our wealth to help those who need it. It is not an easy problem to solve but I think it is best solved by local government and charity and not by the Feds. By saving 10% we ensure that we do not become part of the number in need when things go wrong for us.
OK, this is getting down a path that takes us away from the original idea. If you want to pursue this idea of compassionate use of wealth then check out Francis Schaeffer who wrote the book How Should We Then Live. It might make you think differently. It did me.
Thanks for listening. Stay tuned for Day Five where we talk about making tax fair.
Jerry Robertson
678-231-1578 Cell