Sep

Fixing The Economy by Putting Money Back in the Hands of the Citizens

I want to elaborate on one of the comments posted by Doug Newberry on his blog post "The Newberry Doctrine"

http://blog.the-market-toolbox.com/130/the-newberry-doctrine-how-to-fix-the-economy/

2) I would repeal all income taxes on people making less than 250k per year and make that retroactive back to January 2008 and refund all taxes collected since that point.

Now finally someone is making a lot of sense. The way I see it is that the "small guy", the average citizen working to make a living can’t possibly support the massive debts and deficit the "system" has created. The only way for the government to collect enough tax to get itself out of this mess is for "business" to be profitable and pay tax on those profits. With the economy in it’s current state, tons of businesses are not going to be profitable, hence will pay no tax. Look at all the negative earnings reported across all sectors of the economy. The companies will report losses and there is no tax on losses.

To think the taxes collected on average individuals will make up for this is crazy.

What is needed right now is to put extra money back in the hands of ordinary working people, the masses. When the citizens have more money they spend it at the businesses who then become profitable again and pay the much needed taxes to support the bloated "system. The easiest way to accomplish this is to eliminate the tax on income for people making less then 250k, heck at least 100k. The payroll tax in my opinion is unconstitutional to begin with. The idea of the governments "right to tax" was originally framed as a tax on "commerce", not a tax on individuals income derived from their personal labor. Be that as it may the system has become so convoluted that the idea of repealing income tax is scoffed at by anyone except the average citizen. Do you think if one of the Presidential candidates came out and said " I believe working families making under 250k a year should not pay any income tax" would result in a landslide victory? I do. Everyone wants and needs a raise and this is the way to do it. It won’t cost businesses anything not to hold income tax out of the paychecks of their workers.

Right now there is no tax on "low-income" people but the threshold needs to be raised to encompass the average person. If say anyone making less than 250k or heck even 100k got their entire paycheck every week they would immediately be able to start turning their financial situation around. This would immediately create a lot of debt reduction, saving and additional spending in the real economy which would support business. Corporations would then become profitable or more profitable and they would be in a position to pay the tax. Tax revenue would go up dramatically on "commerce" not on the backs of average Americans.

The economy is supported by businesses selling goods and services to consumers. The consumers are feeling pain right now because of the economic downturn and are clamping down on spending. They are in debt and taxed to death everywhere they turn. Repealing the income tax on working class people would have an immediate and significant benefit and like the "trickle-down" theory, the economy would get a big boost right away.

Say when you get your check this Friday there was no income taxes held out. You get your whole paycheck (less Social Security). All of a sudden you got a nice raise and are able to do productive things with it. Like pay down debt, buy some stuff and maybe even save a little bit. We can’t go on with a negative savings rate in this country and the idea of taxing individuals income is crazy to begin with. Simply raising the threshold where citizens have to pay income tax would turn things around. 250k maybe for a family or 100k per individual would be the right place to set the bar.

It is indeed a simple idea. Put the money back into the hands of the "masses", ordinary citizens will then in turn give a much needed boost to the overall economy and the benefit will be profitable corporations paying lots of taxes on "commerce".

Good idea Doug. Payroll tax on wage-earners is a ridiculous thing to begin with. If I collect wood and build a fire so I don’t freeze to death I should not be taxed on the fruit of my labor. If I collect wood and sell it to others then I agree tax can be collected on the "commerce". Individual income tax must be eliminated and made up with Corporate tax and tax on commerce.

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