Mike Pence endorses the only half-good idea to come out of Washington in a long time:
Indiana Republican Rep. Mike Pence is advocating a plan to create a tax holiday that would free the nation from income taxes for two months.
The plan, proposed by Texas Republican Rep. Louie Gohmert, would use about half of the $700 billion bailout money to give taxpayers a big break in the first two months of 2009 in hopes of denting the economic crisis . . .
I say half good, because using all $700 billion would have given us a four-month tax holiday. And considering the trillions now being thrown around, why not a whole year off? I mean, if the main problem facing the economy is consumer confidence, why not put the money (or, rather, leave it) directly where it will do the most good instead going through all this silly, um, trickle-down stuff? What's your argument against the idea? That it would -- har, har -- increase the deficit?
Comments
The tax holiday would not be necessary if Congress could actually legislate. The problem is they want to make it look like they are needed. They do this by pandoring to lobiests, special interests and companies for ear marks and programs. The US was moving forward and improving the lives of all on a steady sustainable path until Social Security, Medicare, Medicaid, Rx drug program and a host of other social programs were created.
With each program, our representatives told us how much they were doing for us, but never telling how much they were doing it to us.
The bottom line is less than 40% of workers pay any federal income tax (it may be with held, but they get a full refund when they file) while the vast majority pay far more in payroll taxes (Medicare and Social Security).
A tax holiday is great, but I would apply it only to the payroll tax. I would also extend the payroll payback to both the employer and employee. If two months are good, then three months is even better.
Families could use these fund to pay for healthcare (less need for government programs), college (less dependency on government loans and grand), buy a house (no need for subprime loans) and save for retirement (no need to depend on Social Security).
In fact if three months is good then why not just make the payroll holiday permanent?
It is amazing that so few seem to correlate the low savings rate, inability of families to pay for college, health care, buy a home or save for retiement with high payroll taxes that take the very first 15.3% of every dollar of wages up to $102,000.
Whatever the plan is, it would cost a whole new bureaucracy to administrate. With all the laws on the books for taxing income at the federal and state level, amendments and administrative rules would have to be designed, compiled and passed by the legislative branch.
Next special rules would have to be put in place for Social Security, Medicare, private pension plans, union pensions, 401K plans and on and on. This is beginning to sound like the Y2K fiasco because every payroll software package would have to be altered, payroll staff would have to be trained and employees would probably have to choose options
We have already heard that this plan is unfair, because the rich would benefit more than the poor. Never mind that the rich paid-in more taxes.
My plan is simpler to execute and a guaranteed savings that will be much higher than the tax holiday. Government simply has to recess the legislatures for a substantial period of time, maybe six months ...just think of the taxpayer money that will not be spent, the earmarks that will not be passed, the holidays that will not be taken by elected officials to exotic locations, and the burden of taxes befalling future generations will be lessened.