2 month tax holiday

[SnyderShrugged]

Pay No Tax For Two Months?

by Jed Babbin

Washington is dizzy with a bad case of bailout fever. Hundreds of billions of dollars have been dispensed by Treasury Secretary Hank Paulson without apparent success in reviving the financial markets. Now one Texas conservative is challenging Congress and the White House with a common-sense plan that is much more likely to help our economy recover more than bank bailouts or any handouts to carmakers.

Rep. Louie Gohmert (R-Texas), a member of the conservative House Republican Study Committee, proposes to use the $350 billion left of the $700 billion bank bailout to fund a two-month tax holiday that would put money in the pockets of American taxpayers.

Gohmert is a work horse, not a show horse. He went to Texas A&M on an Army scholarship and then to Baylor Law School. He served in the Army JAG and practiced law, eventually becoming a judge and then chief justice of the local appeals court. Elected to Congress in 2004, he’s not been in Washington long enough to be entirely jaded.

“The judge” is smart, tough and relentlessly conservative.

Most Americans were opposed to the bank bailout last fall, and neither they nor the markets themselves have confidence that any of the bailouts or “stimulus packages will work. They will have confidence in Gohmert’s plan because it is an economic stimulus that has been proven by history: tax cuts mean more spending, saving and investment. They pave the way to economic recovery. Government bailouts do not.

Gohmert’s tax holiday plan is elegant in its simplicity: every American taxpayer would pay no federal income or FICA taxes for the first two months of 2009. For the typical American family -- earning about $50,000 a year -- that would mean they would keep about $2000 that would otherwise be paid to the government.

Gohmert’s plan doesn’t pay for Wall Street bonuses or let banks use bailout money to buy other banks or pay dividends. It doesn’t rely on bureaucrats to pay money out to the right people at the right time or try to stimulate the economy with token payments to people who don’t pay taxes.

Most Americans pay about 25 percent of their income in federal income tax and another 7.25 percent in FICA (social security and Medicare taxes). Computing how much money Gohmert’s tax holiday would leave in your family’s checkbook is very simple.

Take your monthly income (the gross amount shown on your pay stubs before tax and any other withholding) and multiply it by .66. That amount is roughly what Gohmert’s two-month tax holiday will leave in your pocket.

According to American Solutions -- Newt Gingrich’s group -- Americans pay over $101 billion in income taxes and another $65.6 billion in FICA taxes each month. Under Gohmert’s plan, all of that money would -- for two months, totaling about $332 billion -- be left in voters’ pockets to spend however they choose to meet their families’ needs.

Gohmert doesn’t plan to include corporations in the tax holiday. But, as he told me, if employees don’t have to pay FICA for two months, the employers’ portion of that would also be eliminated, giving corporations some relief of about $65 billion over the two months.

Gohmert is preparing legislation to declare the tax holiday for January and February of 2009 and plans to introduce it as soon as Congress is back in session next week.

In an interview yesterday, Gohmert told me that Treasury Secretary Paulson hasn’t succeeded with the approximately $350 billion already paid out because his predictions of coming disaster had more credibility than his bailout plans.

Gohmert said, “The bailouts haven’t worked so far because, for one thing, Paulson created a self-fulfilling prophecy of doom and gloom in the stock market. When the Secretary of the Treasury announces, for two weeks, that we could have a depression worse than the 1930’s then, even though he spends the next six weeks saying ‘no, it’s not going to be that bad,’ he has already created schizophrenia within the stock market.”

Gohmert’s plan is limited to individual taxpayers and doesn’t include a capital gains tax holiday. He told me that he’d like to do that too but -- given the current Congress -- it’s probably a bridge too far. He recognizes, too, that if we really want to bring jobs back from overseas, we’d lower corporate tax rates.

Freeing individuals from two months of federal taxation would be a substantial benefit to families and the economy. “Those who can’t catch up on their mortgage get one-third of their money back each month and then they’ll be able to catch up on their mortgages. They’ll be able to refinance their mortgages, they’ll be able to buy stock that they can’t currently buy,” Gohmert said.

He added, “Somebody earning $72,000 would get a couple of thousand dollars back a month if we allow them to get back both income tax and FICA.”

“It would be extraordinary. New cars bought, stock purchased, new homes, new buildings being built.” Gohmert believes that his plan -- which would leave the spending decisions to individual taxpayers -- would be much more effective in reviving the economy than the centralized power given the Treasury Secretary because people “always do better with their own money than the government does.” He said, “It would be so much more valuable to the economy than having one person who’s been wrong on just about everything they’ve predicted or said having that much power.”

Gohmert quoted the late John Kenneth Galbraith who said there are only two kinds of economists: those who don’t know and those who don’t know they don’t know. He placed Paulson in the latter category. The Treasury Secretary was absolutely certain that the mortgage-backed securities needed to be bought by the government and predicted disaster if he wasn’t given authority to buy them up. But -- given his more recent statement that he knew at the moment the legislation was being passed by Congress that that strategy wouldn’t work -- Gohmert’s judgment seems entirely justified.

This week, automakers will come back to Congress with their plan to justify a $25 billion bailout for their companies. One thing is certain: the plan won’t include a solution to the problem of their industry-killing labor agreements. Their plan will certainly bail out the United Auto Workers union and leave the car companies in the same mess they are in now. Gohmert’s plan wouldn’t throw good money after bad: it would give our economy a badly-needed boost.

When Congress returns next week to consider the automakers’ bailout, it’s unlikely that Speaker Pelosi will allow Gohmert’s bill to come to the floor. But between now and then conservatives can rally to it, and perhaps -- just perhaps -- push the White House to support it and gain the chance of a House vote.

Even President-elect Obama should support Gohmert’s plan. Wasn’t he proposing a tax cut for the middle class?

http://www.humanevents.com/article.php?id=29700

[tizzod]

Yeah....good luck with all that.

[SnyderShrugged]

"Gohmert’s tax holiday plan is elegant in its simplicity: every American taxpayer would pay no federal income or FICA taxes for the first two months of 2009. For the typical American family -- earning about $50,000 a year -- that would mean they would keep about $2000 that would otherwise be paid to the government."

[SnyderShrugged]

Yeah....good luck with all that.

do you dislike the though or just dont believe it can happen? (I'm skeptical that the votes would be there too)

[tizzod]

do you dislike the though or just dont believe it can happen? (I'm skeptical that the votes would be there too)

I don't see how the votes would ever be there. I don't even think it would ever make it to a vote.

The thought is always nice!

[Burgold]

I'm not sure it would work the way they intend anyway. Right now, too many of us are in the mood too stuff our money under our matresses. Many of us still have money to spend, but we aren't spending as we used to. Give us more money, we may just horde that too. The root of the problem isn't at the consumer level. Although, confidence is an important aspect. The problem is that many people have lost faith in all the major institutions and are fearful of the future. What's an extra five hundred today or spending half as much at the pump if you are worried that your factory, corporation, etc. is going to close.

Don't get me wrong. It would be nice to have more money. I don't think it would do all that much too fix the mortgage or financial crisises. I think you have to convince people that the sky isn't falling.

[twa]

I don't see how the votes would ever be there. I don't even think it would ever make it to a vote.

The thought is always nice!

Unfortunately I agree, but I do look for another stimulus check once O is in office to appease the masses.

The bailouts and more stimulus checks ought to really worry anyone paying attention.

[Tastes Like Chicken]

If it were possible I'd like the idea. Better than a stimulus check IMO.

[DjTj]

Even President-elect Obama should support Gohmert’s plan. Wasn’t he proposing a tax cut for the middle class?

If Obama passes his tax cut, it will do basically half of what this plan would do.

"Gohmert’s tax holiday plan is elegant in its simplicity: every American taxpayer would pay no federal income or FICA taxes for the first two months of 2009. For the typical American family -- earning about $50,000 a year -- that would mean they would keep about $2000 that would otherwise be paid to the government."

For a family making $50,000 a year, Obama's tax cut will let them keep about $1,000.

Obama's plan is of course, progressive, however, so while under Gohmert's plan, a family making $500,000 would get $25,000 or so, Obama wouldn't give anything to families making more than $250,000. Obama's plan of course also costs a lot less than Gohmert's plan. Gohmert wants to spend more than $300 billion while Obama's tax cuts are only about $80 billion.

[HOF44]

Yea tax holiday!!!! Booo stimulus checks!!

[Joe Sick]

So, the "relentless" conservative wants to put us further in hock than the wealth-redistributing liberal? Is this Bizarro world?

[Seabee1973]

If Obama passes his tax cut, it will do basically half of what this plan would do. For a family making $50,000 a year, Obama's tax cut will let them keep about $1,000.

Obama's plan is of course, progressive, however, so while under Gohmert's plan, a family making $500,000 would get $25,000 or so, Obama wouldn't give anything to families making more than $250,000. Obama's plan of course also costs a lot less than Gohmert's plan. Gohmert wants to spend more than $300 billion while Obama's tax cuts are only about $80 billion.

Gohmerts plan isnt spending any money except teh pape rits written on to propose the bill

[Seabee1973]

So, the "relentless" conservative wants to put us further in hock than the wealth-redistributing liberal? Is this Bizarro world?

How would taht put us further in hock? You would be keeping more of teh money you earn

[Burgold]

He means the government. The government isn't about to cut 1/6 of its spending. So, a tax holiday for two months is going to be a big ramp up in the deficit.

[SnyderShrugged]

He means the government. The government isn't about to cut 1/6 of its spending. So, a tax holiday for two months is going to be a big ramp up in the deficit.

no, it wouldnt be any different than it already is. The proposal is to use the remainder of the $700B for the holiday. He isnt asking for more $, just a different way to spend what has already been allocated.:2cents:

[SnyderShrugged]

So, the "relentless" conservative wants to put us further in hock than the wealth-redistributing liberal? Is this Bizarro world?

I'm unclear what you mean in this post.

[Burgold]

Ah, sloppy reading on my part. We still have to find a way to pay back that 700 billion. Originally, it was described as an investment that someday the banks would repay and we'd make a profit on. That certainly wouldn't be the case from a "tax holiday"

Like the tax stimulus checks, the tax holiday seems more like a PR move than something that actually fixes something. I think the mindset is wrong and like I said above people would squirrel away the money. Most of our financial situations haven't changed in the last six months, but our spending sure has. We're also "saving" half the ammount that we used to pay for gas. That isn't going to retailers, restaurants, etc. right now.

I was wary of the bailout and I think it was rushed out and the strings on it were made of Kite string. Never trust rushed out legislation during an election year. Still, if something needs to be fixed or addressed we should fix or address it. The bailout seems like it was done in too much of an ad-hoc jury-rigged fashion. I think most Americans knew that and that was why we were against it. We are not against fixing the financials. We, I am against giving anyone a blank check and saying--

I know you were a greedy, corrupt ****, but here's a blank check. Fix your mess.

Because the greedy, corrupt **** is going to take that money as a get out of jail free card. That's also why I dislike the notion of bailing out the automakers.

[Thiebear]

Take the 7,000,000,000,000 dollars your going to dole out to 12 industries.

divide it by 200,000,000 million adults in the United States.

35,000 to each adult:

As was said in the other thread:

This will fix the foreclosure

This will fix the car industry

This will go right back to the gov't in sales tax etc.

[SnyderShrugged]

Ah, sloppy reading on my part. We still have to find a way to pay back that 700 billion. Originally, it was described as an investment that someday the banks would repay and we'd make a profit on. That certainly wouldn't be the case from a "tax holiday"

Like the tax stimulus checks, the tax holiday seems more like a PR move than something that actually fixes something. I think the mindset is wrong and like I said above people would squirrel away the money. Most of our financial situations haven't changed in the last six months, but our spending sure has. We're also "saving" half the ammount that we used to pay for gas. That isn't going to retailers, restaurants, etc. right now.

I was wary of the bailout and I think it was rushed out and the strings on it were made of Kite string. Never trust rushed out legislation during an election year. Still, if something needs to be fixed or addressed we should fix or address it. The bailout seems like it was done in too much of an ad-hoc jury-rigged fashion. I think most Americans knew that and that was why we were against it. We are not against fixing the financials. We, I am against giving anyone a blank check and saying--

I know you were a greedy, corrupt ****, but here's a blank check. Fix your mess.

Because the greedy, corrupt **** is going to take that money as a get out of jail free card. That's also why I dislike the notion of bailing out the automakers.

we are on the same relative page in terms of the bailout and of stimulus checks. I dont think theat we will ever see the bailout $ "paid back" though. A tax holiday, especially a longer term one like this proposal would help at least in the short term. I think the best impact would be that everyone would actually start to feel the realities of how much money is confiscated from our paychecks. Imagine the mindset of America when, after 2 months of not having massive deductions from our pay coming out, have to go back to regular business again. I'd bet that many would start to feel a bit more negative about taxes.

[Burgold]

On the other hand, after those two months imagine how poor people would suddenly feel and how strong a negative impact that would have on consumerism. It's a recipe for disaster.

[SnyderShrugged]

On the other hand, after those two months imagine how poor people would suddenly feel and how strong a negative impact that would have on consumerism. It's a recipe for disaster.

It couldnt be too much of an impact from that section of the population. Their disposable income would simply go back to the original levels from 2 months prior, with the extra benefit (IMHO) of thinking twice before voting for big spenders next time around in the elections.

i've always been of the school of thought against payroll deductions to pay taxes. I think that Americans would have a very different perspective if we had to cut a chack each pay period for the taxes. It would bring the issue to the foreground and emotions about it would be huge. Pols would finally be held more accountable for their spending decisions come election time.

[Burgold]

I disagree. Think how quickly we acclimate to things and things become "normal' After four paychecks... that ammount of money would become expected, normal. Seeing the reduction would feel like a paycut and people would pop their turtle heads back inside their shells.

Look how quickly we adapted to 2 dollar, 3 dollar, 4 dollar gas? I remember seeing a gas station offer gas a little wasy back at 3.91 and getting excited because it was so cheap and then mad at myself for thinking nearly four buck gas was cheap.

[Thiebear]

how bout this:

Take the money and put it into a check:

Here is 30k: pick one: Ford/Chrysler/GM:

Take this and give it to them, drive away with any car you wish

or

Here is 30k: this is your mortgage holder:

Give this to them and you don't have to pay the mortgate for x number of months now.

For me it would be about 19months. then i'd have that extra money each month for bills and car payment.

[TMK9973]

Take the 7,000,000,000,000 dollars your going to dole out to 12 industries.

divide it by 200,000,000 million adults in the United States.

35,000 to each adult:

As was said in the other thread:

This will fix the foreclosure

This will fix the car industry

This will go right back to the gov't in sales tax etc.

You need a cacualtor.

The 7,000,000,000,000 = 7 TRILLION. You have a exta 0.

So it's 3500 per adult.

Oh - and there are 217,000,000 adults in the us. So it's $3225 per adult.

[USS Redskins]

It's great plan. It makes sense and the money is already earmarked. Trouble is it does make sense and there is very little sense in DC. Letting people keep their own money - that is ridiculous!