AMERICAN CONSERVATISM IN 2008 AND BEYOND

Martin Feldstein (the
former top economic adviser to President Ronald Reagan) pointed out in an op-ed that the
federal government spent $78 billion on the tax rebates in the second quarter of last year (2008)but
consumption only increased by $12 billion in response, suggesting that most of the money was
saved or used to pay down debt.

Okay, not for Cyclop, but for anybody who really is interesting in discussing solutions that will work, here is one from Newt's list. And I don't recall anybody coming up with this suggestion before. Comments anyone?

Quote:

A two-year, 50% reduction in the Social Security and Medicare tax for both the employee and the employer. This provision would guarantee that virtually everyone who pays federal taxes (many of whom do not pay income tax but do pay payroll taxes) will have an immediate boost in income and that small businesses will see a dramatic increase in available cash to hire more people or make investments for the future. This reduction would also help the cash flow problems of government at all levels, which also have to pay the employer's match.

This proposal creates the opportunity for a serious conversation with every employer about how it would increase their income and give them more resources to create jobs. The revenue loss to the trust funds would be transferred from the general fund (a better use for the money than either TARP or the Politicians Spending Act of February).

A two-year, 50% reduction in the Social Security and Medicare tax for both the employee and the employer. This provision would guarantee that virtually everyone who pays federal taxes (many of whom do not pay income tax but do pay payroll taxes) will have an immediate boost in income and that small businesses will see a dramatic increase in available cash to hire more people or make investments for the future. This reduction would also help the cash flow problems of government at all levels, which also have to pay the employer's match.

This proposal creates the opportunity for a serious conversation with every employer about how it would increase their income and give them more resources to create jobs.

The revenue loss to the trust funds would be transferred from the general fund (a better use for the money than either TARP or the Politicians Spending Act of February).

the tax levied cannot be one sum upon an article at one [157 U.S. 429, 593] place, and a different sum upon the same article at another place.

Martin Feldstein (the former top economic adviser to President Ronald Reagan) pointed out in an op-ed that the federal government spent $78 billion on the tax rebates in the second quarter of last year (2008) but consumption only increased by $12 billion in response, suggesting that most of the money was saved or used to pay down debt.

We all got a tax cut by President Bush in 2003. As a consequence, the USA economy grew.

Well I'm sure he appreciates you as a devoted fan and admirer. I suppose you wouldn't care to actually comment on the specific suggestion I pulled off of Newt's list either?

uniform: marked by lack of variation, diversity, change in form, manner, worth, or degree : showing a single form, degree, or character in all occurrences or manifestations.

Let it be recollected that the proportion of these taxes is not to be left to the discretion of the national legislature, but is to be determined by the numbers of each State, as described in the second section of the first article. An actual census or enumeration of the people must furnish the rule, a circumstance which effectually shuts the door to partiality or oppression. The abuse of this power of taxation seems to have been provided against with guarded circumspection. In addition to the precaution just mentioned, there is a provision that "all duties, imposts, and excises shall be UNIFORM throughout the United States.''

Pollock v. Farmer loan and Trust, the USSC in 1895, wrote:
The uniformity thus required is the uniformity throughout the United States of the duty, impost, and excise levied; that is, the tax levied cannot be one sum upon an article at one [157 U.S. 429, 593] place, and a different sum upon the same article at another place. The duty received must be the same at all places throughout the United States, proportioned to the quantity of the article disposed of, or the extent of the business done. If, for instance, one kind of wine or grain or produce has a certain duty laid upon it, proportioned to its quantity, in New York, it must have a like duty, proportioned to its quantity, when imported at Charleston or San Francisco; or if a tax be laid upon a certain kind of business, proportioned to its extent, at one place, it must be a like tax on the same kind of business, proportioned to its extent, at another place. In that sense, the duty must be uniform throughout the United States.
...
'The difficulties in the way of this construction have, however, been very largely obviated by the meaning of the word [157 U.S. 429, 595] 'uniform,' which has been adopted, holding that the uniformity must refer to articles of the same class; that is, different articles may be taxed at different amounts, provided the rate is uniform on the same class everywhere, with all people, and at all times.

Under the Bush Administration, real GDP grew at an average annual rate of 2.5%,[78] considerably below the average for business cycles from 1949 to 2000.[79][80] Bush entered office with the Dow Jones Industrial Average at 10,587, and the average peaked in October 2007 at over 14,000. When Bush left office, the average was at 7,949, one of the lowest levels of his presidency.[81] Unemployment originally rose from 4.2% in January 2001 to 6.3% in June 2003, but subsequently dropped to 4.5% as of July 2007.[82] Adjusted for inflation, median household income dropped by $1,175 between 2000 and 2007,[83] while Professor Ken Homa of Georgetown University has noted that "after-tax median household income increased by 2%"[84] The poverty rate increased from 11.3% in 2000 to 12.3% in 2006 after peaking at 12.7% in 2004.[85] By October 2008, due to increases in domestic and foreign spending,[86] the national debt had risen to $11.3 trillion,[87][88] an increase of over 100% from the start of the year 2000[/color] when the debt was $5.6 trillion.[89][90] By the end of Bush's presidency, unemployment climbed to 7.2%.[91] The perception of President Bush's effect on the economy is significantly affected by partisanship.[92]

ftp://ftp.bls.gov/pub/special.requests/lf/aat1.txt
HOUSEHOLD DATA ... ANNUAL
1. Employment status of the civilian noninstitutional population, 1940 to date
...

Second, the specific policy proposal would have been a perfectly good policy in 2001, when the issue was giving the Clinton era surpluses back to the people. If, back then, the Republicans had chosen it instead of the Bush tax cuts, they might have prevented turning me off of the Republican party.

But the package won't really work in 2009, now that the main issue is short term economic stimulus. Today, most taxpayer would save their tax cut rather than spend it, and only the part spent would stimulate the economy.

If you're interested in policies that work, the closest one to the one you're proposing would be to vastly expand the Earned Income Tax Credit. It would work because the people who get it are poor and likely to spend their tax credit. And Republicans could still sell it as a tax cut.

John Ray (M.A.; Ph.D.) -- former member of the Australia-Soviet Friendship Society, former anarcho-capitalist and former member of the British Conservative party.

Thomas wrote

Quote:

Second, the specific policy proposal would have been a perfectly good policy in 2001, when the issue was giving the Clinton era surpluses back to the people. If, back then, the Republicans had chosen it instead of the Bush tax cuts, they might have prevented turning me off of the Republican party.

But the package won't really work in 2009, now that the main issue is short term economic stimulus. Today, most taxpayer would save their tax cut rather than spend it, and only the part spent would stimulate the economy.

If you're interested in policies that work, the closest one to the one you're proposing would be to vastly expand the Earned Income Tax Credit. It would work because the people who get it are poor and likely to spend their tax credit. And Republicans could still sell it as a tax cut.

With an decrease in social security/medicare tax, the working poor would receive an increase in their paycheck that wouldn't happen with an income tax cut, so why wouldn't they be as willing to spend that as they would tax relief through the Earned Income Tax Credit?

And why wouldn't small business use their tax relief to hire needed employees as is suggested?

And why wouldn't the government experience relief in the drain on the treasury for the same reason as is suggested?

We're talking about initiative to stimulate the economy.

Sending the people a one time government check or issuing one time government contracts here and there doesn't inspire much confidence that things are better. Knowing that your take home pay is going to be reliably increased for the next two years seems to me to be a much better incentive to encourage people to spend that money.