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OzarkD9S
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My Stimulus Idea...And Yours.

Thu Jul 09, 2009 9:57 pm

First off, I'm no economist, and if you have 10 economists in a room they will probably give you 10 different suggestions on how to stimulate the American economy.

The past year has seen the American economy shed hundreds of thousands of jobs, thus decreasing the government's tax income as well as taking billions of potential dollars out of the general economy.

So I have an idea to help stimulate the basic need of jobs for people that want them. Tell me what you think.

For every full time (let's for argument's sake say 32-40 hours a week guaranteed to the new hire or a current part-time worker bumped up to that level) that the Feds "kick back" a descending percentage of that employee's federal taxes to the employer over a 10 year period either in direct cash or a tax credit.

Year 1: Fed kicks back 10% to employer
Year 2: Fed kicks back 9%
Etc for a total of 10 years.

Employee's hired under the program may not be fired or laid off for the duration of the program except for direct violations of company policy (theft, excessive absences etc...) or if in a union protected environment, seniority issues come into play. Nor can the employee be terminated after the program and rehired by same company to start the kick back scheme all over again.

Existing employees of companies are "grandfathered in" at say a 2% kick back level until they leave the company or retired.

To help offset the temporary loss of government revenue, a 2% national "employment sales tax" is instituted with the funds mandated to help partially cover the cost of the program. Increased overall employment and increased consumer spending as a result help boost the overall economy.

Any thoughts on this scheme?
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Dreadnought
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RE: My Stimulus Idea...And Yours.

Thu Jul 09, 2009 11:47 pm



Quoting OzarkD9S (Thread starter):
For every full time (let's for argument's sake say 32-40 hours a week guaranteed to the new hire or a current part-time worker bumped up to that level) that the Feds "kick back" a descending percentage of that employee's federal taxes to the employer over a 10 year period either in direct cash or a tax credit.

Year 1: Fed kicks back 10% to employer
Year 2: Fed kicks back 9%
Etc for a total of 10 years.

I'm an economist so I'll chime in.  Wink

I like the way you are thinking, in that the way to increase employment is to make it less costly for employers to hire (by reducing the tax implications).

The problem in your approach is that it is complicated. The IRS is going to have to try to track your employees and determine their exact hiring date, the appropriate rebate, etc. etc. for millions of businesses (and increase their headcount to cope). You are not alone - We all like to create neat little programs that encentivise some specific activity. But that is the reason why we have a tax code that is 100,000 pages long and growing.

I prefer to eliminate 99,998 of those pages and give a simple tax code. Eg. Businesses will pay 20% of net entity income after deduction of operating expenses, depreciation and amortization according to GAAP rules. Losses carried forward can be retained for 5 years.

There you go - I've just rewritten all the business tax law we need in 2 sentences. Might need a few more sentences, but you get the idea - Get rid of all the loopholes. Make it simple, with a low rate.

Of course such a simple tax law would put about 100,000 tax accountants and tax lawyers out of work, but I think that is a small price to pay for the ability of all businesses, from GE down to the local donut shop to calculate their taxes on the side of a paper napkin. THAT will encourage employment and investment.

For a temporary stimulus, temporarily repeal all payroll taxes and income taxes for a couple of quarters. The effect will be immediate and easy.

By the way, Obama has found another source of Stimulus Big grin Wait till Michelle sees this.

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OzarkD9S
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RE: My Stimulus Idea...And Yours.

Fri Jul 10, 2009 12:12 am

Shall we run in 2012? Dreadnought/Ozark!?
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DocLightning
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RE: My Stimulus Idea...And Yours.

Fri Jul 10, 2009 12:13 am



Quoting Dreadnought (Reply 1):

For a temporary stimulus, temporarily repeal all payroll taxes and income taxes for a couple of quarters. The effect will be immediate and easy.

And what do you run the government with?

Quoting Dreadnought (Reply 1):


By the way, Obama has found another source of Stimulus Big grin Wait till Michelle sees this.

You're a naughty boy, Dreadnaught.  no   Wink
-Doc Lightning-

"The sky calls to us. If we do not destroy ourselves, we will one day venture to the stars."
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OzarkD9S
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RE: My Stimulus Idea...And Yours.

Fri Jul 10, 2009 12:16 am



Quoting DocLightning (Reply 3):


And what do you run the government with?

Legalize pot. And tax it.
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Phoenix9
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RE: My Stimulus Idea...And Yours.

Fri Jul 10, 2009 12:20 am



Quoting Dreadnought (Reply 1):
By the way, Obama has found another source of Stimulus Wait till Michelle sees this

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- Signed

Obama
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Dreadnought
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RE: My Stimulus Idea...And Yours.

Fri Jul 10, 2009 12:25 am

Quoting DocLightning (Reply 3):
And what do you run the government with?

Eliminating 100% of all the items below for 6 months would cost (based on latest GPO estimates):

Corporate Taxes: $73 billion
Social Security Payroll Taxes: $449 billion

http://www.gpoaccess.gov/usbudget/fy10/hist.html

This would be cheaper and far more effective than the boondoggles passed by Congress which have proven to be worthless as stimulus.

Edit: I find it stunning to hear an Obama supporter complain about "How would the government pay for that?"

[Edited 2009-07-09 17:29:36]
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texan
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RE: My Stimulus Idea...And Yours.

Fri Jul 10, 2009 2:03 am

Six-month technology tax break (or credit, although a temporary tax break would work better). Businesses investing in new technology, as defined in a particular way, over a six-month time frame pay no taxes on that technology. Maybe couple that with accelerated depreciation on some items. Redirect stimulus money to projects that have a greater chance of creating jobs (although, to be fair, it will take up to a couple of years to see any true change from the stimulus package. I still think the stimulus money should have been more concentrated toward job creation, though).

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