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A way out of the recession
First off, let me say that I don't live in the US. I am one of the "goofy" Canucks that inhabit the frozen land north of you. I have done some thinking as to how both the US and Canada can reduce the effects of the recession that is hitting our economies hard right now.
Rather than pumping trillions of dollars into private industry to help a select few, my idea is to eliminate income taxes, both personal and corporate, for one year. The stipulation, to be able to pay no tax, is that you must "spend" this tax money. Not put it into your Savings Plan, hoard it into you savings account or pay down your mortgage (although you could pay your mortgage arrears), you must spend it on commodotties or services. You buy a chair and table, somebody has to make a chair and table, and get apids for doing so. You hire a carpenter and pay him then he can save some of the money he makes because of his "tax free" status.
I believe this could stimulate the economy in a natural way and help to get both the US and Canada out of the recession. We may have to suffer a bit, as some government projests may have to be delayed for a time, but the benifits would far out weigh the problems.
I have no idea how to get this message to the politicians that need to hear it so I am posting on this forum. If anyone thinks this is a good idea, and knows who should hear it, please forward it on. I would really like feedback from knowledgable people, either for or against it.
I am not a politician or economist, so I am not totally sure what would happen after one year. I assume that the furniture maker who made and sold the chair and table would spend his money on other commodities, thereby stimulating the economy even more.
I believe that, to beat the recession, you have to spend money and government handouts cannot do it. The money has to get into the hands of the average shopper and be spread around the marketplace. This way everyone can benefit and the economy will take it's natural course.
Like I said, I am no expert, just an average working "Joe". I am sure there are a lot of holes in my theory and I just put it out there for the experts that could possibly take the basic idea and either refine it or dump it in the trash.
I'll tell you how to stimulate an economy! Have a hellacious hailstorm that tears up everything in your town. LOL That's what happened in northwest Austin and the surrounding suburbs at the end of March. There were hailstones up to tennis ball size.
Thousands and thousands of homes got new roofs, new windows, skylights, trim and siding repair, fences, etc. Many thousands of cars were damaged and good percentage were totalled.
There is still massive amounts of work to be had around here. There was work for roofers, house siding, window and trim replacement, fencing, vehicle dent removal places, body shops, windshield replacment, new car sales for those who turned their cars in when they were totalled, yard work since all the trees and landscaping were beaten so badly, etc., etc., etc.
And everyone I know has thought, "well, since I'm getting this work done, I may as well get xyz done as well" and giving even more work out.
Millions and millions of dollars have been flying around here.
It seems that mother nature is the best stimulus around, CTM. Just as things were slowing down from Katrina, Gustave hit....and all things construction related have been booming around here for years.
There has to be a better way!! ;-)
Well, the good part of this Mother Nature Stimulus Package is that it actually pays for work that is done here so it goes into the pockets of workers here. (Not necessarily including all of the illegal immigrant workers who are sending some of that money home. But they do have to spend some of it here to eat and live.) People don't just go and buy a tv made in China.
Hello Reagannelson, and welcome to RFO. Although your idea is tempting from a personal level, I think it would create as many problems as it would solve on the national level. If the government had no income for a year, how would it operate? How would it provide even the most basic services? How would it provide what is needed for our military that is fighting two wars?
We already have a huge deficit, and to function for a year with no tax revenue would increase that deficit beyond comprehension.
I do like your idea of spending the extra money in our pockets as a way to stimulate the economy. This was the purpose of the middle class (and lower brackets) tax cuts we recently experienced. These are the people that spend the money on that end table, at the grocery store, or buy new shoes for the kids.
Keep thinking and coming up with new ideas, or ways to refine your current one. It is by thinking outside of the box that change occurs.
I think he is referring to personal income tax. The government would still receive money from corporations and such. The govt would get enough money to survive. They would certainly have to make cuts. Like stop funding unnecessary research and such, but they wont crumble.
"Government doesn't solve problems, it subsidizes them" ~ Ronald Reagan
That's true, and I thought of the corporate taxes after I posted. But considering the tax breaks of all kinds that corporations etc. enjoy, I'm still don't think there would be enough money.
Maybe Mary can find us some information as to how much of the tax revenue is paid by personal income taxes, and how much is from businesses.
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It's sad that we've reached a point where 'government service' is a dirty word... If we're the greatest country on earth, maybe we can have the greatest government.
Lewis Black
Uh oh...time to brush up on my reading comprehension skills....I re-read and you are exactly right. He did say that!
Slow down Suzi...slow down. ;-)
I think overall it sounds like a great idea. But it is also not the first time I heard it. Mike Church, popular radio show host on sirius satelite radio, has proposed something very similar. He has coupled it along with a few other ideas, I cant quite recall. Perhaps Nelson, you could go to his website and see what you find. http://www.mikechurch.com/joomla/index.php
Keep in mind this is a Conservative Libertarian type talk show host. Many of his ideas reflect those principles. I am not suggesting him to you for any other reason than to research his plan for America (and in your case, Canada) Economic recovery.
Good luck. It sounds like a great plan. It could use some tweaking, but its a sound base.
Although I like Hopes plan better. That will put more money in my pocket, and buy my wife that addition to the house she wants, and then some.
"Government doesn't solve problems, it subsidizes them" ~ Ronald Reagan
I could go with Hope's plan, but I want to be able to use the money to pay off my house entirely. (I know that there are those who argue against doing such a thing, but there are just as many who argue for it.) Anyway, it would just be nice to only have to pay taxes and insurance on the house monthly.
I see absolutely no problem with CTM paying off her house in Hopes plan. You see, if CTM pays $1000 a month for her mortgage, and is able to pay that mortgage off. She now has $1000 extra for spending. Maybe a home improvement loan (sparking the construction economy) a new lawnmower for her newly landscaped yard. A new car. Clothes, etc.......
Paying off a mortgage frees up new spending cash, much less what it does for ones ease of mind. I think giving people money, for whatever reason, even if to pay off their mortgages, is an awesome idea.
Either way, no matter what the reason, if you put money in the hands of the people, it will spark an economy!
"Government doesn't solve problems, it subsidizes them" ~ Ronald Reagan
Either way, no matter what the reason, if you put money in the hands of the people, it will spark an economy!
Isn't that the mantra of the more tax cut guys except it would be a yearly infusion of money instead of a one time event?
Sure is. But I see a significant difference in giving people a few bucks a week, as opposed to giving them $100k in one payment. Tax cuts will not necessarily spark an economy this bad. But a huge influx of massive amounts of money will.
"Government doesn't solve problems, it subsidizes them" ~ Ronald Reagan
I was mainly just kidding.
But seriously how long will a recovery last given an artificial, unsustainable, influx of cash? What happens when that demand goes away?
I really dont know. Only one way to find out I guess. But I am not saying this is a fool proof plan. Im not sure I even suport it. I am just saying that giving the people $100k each will certainly spark the economy.
Maybe it would be sustained by some of those people investing in business. Perhaps a new mousetrap inventor will now have the capital to start his business making them. Employing people. Buying wood, steel, paint, etccc for his business. I dont really know. I certainly would like to try though. I could use a $100k paycheck. Id do a lot with it. Including invest, build, and purchase!
Maybe I can be the guinea pig. Give me the money, see if I spark the economy. Then see if it sustains itself. If it dont work, at least we tried. LOL
"Government doesn't solve problems, it subsidizes them" ~ Ronald Reagan
Heck yes I am for socialism if it gets me $100k. Id even vote for Obama next election! LOL!!!!!!!
In all honesty, this would never happen. The government would never give that much money (control) to the people. The Govt likes it too much. I was just having fun with this thread. Dont mistake jokes and fun for hypocrisy. Steven, you brat! ;-)
"Government doesn't solve problems, it subsidizes them" ~ Ronald Reagan
Good plan!!!!!!
"Government doesn't solve problems, it subsidizes them" ~ Ronald Reagan