One Tax-Cut to Rule Them All
We are in a serious economic situation right now. Not many people are aware of how dire things really are. While President Obama and the Democrat-run House and Senate are trying to work out how much more to spend on this and that, the available funds to pay for it have come and gone. Right now, the United States is out of cash, and must borrow to pay for anything Congress might decide is a good idea.
Did you know that it it costs over $300 billion just to service the debt of the US Federal government right now? Some readers may not know what that means. It means that the interest payments alone, on past loans given to the US Government add up to $300,000,000,000 every year. Let’s put that into perspective.
The top company on the Fortune 500 is Exxon Mobil with $45 billion in profits. The top four profitable companies on the list totaled profits of $100 million. You have to go down to #70 in the list before the profits add up to the interest on the US debt. If we taxed these companies at 100% of their profits for a year, we could pay the interest, but not the principal on the debt. If you think taxing these companies at 100% is a good idea, you’re an idiot that should have studied some basic economic theory, but nonetheless, I know you’re out there.
We are in an economic downturn, and even if some are saying we’re on the way out, we are going to continue to be in a dire economic situation unless something is done about government spending and debt. Congress, and President Obama should not be doing anything that would cost, well, pretty much anything. If they do, it adds to the debt, and offers no stimulus to the economy to offset the costs.
That’s right. As a blanket statement, I said that anything Congress and the President do that costs money will provide no stimulus to the economy. There may be some ancillary benefits, but all money spent by the government must be, sooner or later, paid for by the citizens of the United States. Personal income taxes are a direct tax, to be sure, but the rest of the taxes are paid by the citizens as well. Corporate taxes aren’t paid for with money pulled from trees. The taxes are a cost of doing business, and that cost is always passed along to the consumer. If Congress passes a new tax on oil companies, you pay more for gas at the pump. It’s a simple concept, and one that many cannot grasp.
What do we consider a recession? A recession is an economic downturn that lasts at least 3 fiscal quarters. Why do we care if there is a recession? It’s because of the worry that we, as citizens, will end up with less financial stability, or cash to purchase for our needs. How do we improve the economy? We increase the amount of money flowing between individuals, businesses, and corporations for goods and services.
Will the “Cap and Trade” bill, which is designed to put certain power companies out of business, increase the flow of money for goods and services? Of course not. It’s designed to do otherwise. Will the so-called “health care reform” bills in Congress increase this flow? No, like the cap and trade bill, the health care bill is designed to put a large portion of the health care industry out of business, leaving many thousands unemployed.
What if there was something we could do that would increase the flow of money for goods and services on a large scale? What if it would also result in a dramatic cut in the number of people able to get insurance? What if it would result in a turnaround in the home market? What if it would stimulate the automobile industry? What if it would mean more jobs, lower prices on many items, higher food production, and possibly even more people driving fuel-efficient cars?
I know what it would take to make this happen. It would work. The results would be dramatic, and immediate.
All we have to do is drop the federal personal income tax to zero.
Look at your last pay stub. How much of your income was taken out to pay the federal income tax? Are we talking $50, which would buy groceries for one for a week? Is it more like $100? For one month’s income taxes, could you buy an iPod? A new PC? Make a car payment? For some, it may even be a house payment.
What would be the cost to the US Government of a tax cut like this? It would remove approximately $1 trillion from the government’s coffers. Let’s not get stuck on that, though, because that number is false. It isn’t even worth considering without more information.
You see, the influx of cash that a personal income tax cut of this magnitude would cause would have other effects. With more money available, more will be spent. Sure, some will throw their money away on beer, but that means more sales for beer companies, and they’ll have to hire new employees to meet the demand. Some will buy cars, meaning automobile companies will have to produce and sell the cars. How many iPods and iPhones will be purchased? Apple will probably have to build new manufacturing facilities just to handle the demand. More production and purchasing of goods and services means more corporate income, and therefore more money going to corporate income taxes.
That $1 trillion cost for the tax cut would mean more purchasing, more manufacturing, more hiring, more income, and therefore more purchasing. It’s a wonderful circle that can be helped, or harmed, by government action. It is likely that, within a year or two, the $1 trillion hit the first year would result in more than $1 trillion in increased tax returns. The government would, if history is any guide, make more then it cost.
Of course, as brilliant as this idea is (it wasn’t mine originally, mind you) it won’t happen. You see, this idea is based in one concept that few in Washington DC understand.
Freedom.
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One Tax-Cut to Rule Them All | Lockjaws Lair http://tinyurl.com/yau6x7a