A government spending stimulus will fail. Throwing money at failing corporations or even at individuals through "rebates" will not succeed in getting the economy growing again. To do this, individuals and business must have the right incentive to spend money. They need to be convinced that their money will benefit them after it is spent.
The best way to do this would be to cut taxes on income, business, and especially capital gains. Many people believe that there are serious deals in the stock market, but want to hold on to their money for fear of the market falling lower. The opportunity for making bigger gains by removing the capital gains tax would help provide this stimulus towards investment.
Similarly, allowing businesses and individuals to retain more of their earnings by sending less to the federal and provincial (or state) governments would allow companies to keep more workers on the payroll, invest in new technologies and capital resources, and expand their businesses.
The Democrats pledge to keep the automakers going is a fruitless adventure into more corporate welfare and corruption that will only lead to another "needed" bailout in 10, 15 or 20 years. The same is true for Canada. Any bailout would have to be coordinated with the United States for any remote hope of having even a minor effect. Even if such a bailout would work, which I strongly doubt, it should only take place after bankruptcy protections are utilized to renegotiate union contracts and obligations to debtors.
An investment in infrastructure is nice, but its effects would be felt for some time. Government moves very slowly, by the time ground was actually being broken, the economy might be in far worse shape or well on its way to recovery.
A US Republican, Congressman Louie Gohmert, has proposed a tax holiday for businesses and individuals in the first two months of 2009. This would involve the same amount of funds as the stimulus package which has proven useless so far. Gohmer argues:
"We need to give this money to the people who earned it. I am sick of Washington millionaires trying to decide which of their cronies should get the next wad of taxpayer money," Rep. Louie Gohmert continued. "Think about how much you would have if you didn't have any social security or income tax withheld from your pay check, or if you didn't have to pay those taxes for January and February! Americans could take and invest their own money where they believe it should go - to paying down mortgages, buying a new car, making credit card payments. The economy would get relief where it is needed the most. Why try to decide how to prevent foreclosures? Just give taxpayers their own money to catch up on their payments. Those in lower income brackets who are hit the hardest by the FICA tax would see huge money back, and then THEY could choose who should benefit from their hard earned money. Even the self-employed and small business owners would receive a fantastic amount of their own much-needed money, and they will be able to invest that back into their businesses and even create the ability to hire more people.”
This is the best idea out of Washington in decades and it deserves a good, hard look. It would certainly help me pay my school loans and car payments, and I suspect a lot of tax payers would welcome this option over the corporate welfare and bureaucratic waste that is the norm in Ottawa and Washington DC.
The best way to do this would be to cut taxes on income, business, and especially capital gains. Many people believe that there are serious deals in the stock market, but want to hold on to their money for fear of the market falling lower. The opportunity for making bigger gains by removing the capital gains tax would help provide this stimulus towards investment.
Similarly, allowing businesses and individuals to retain more of their earnings by sending less to the federal and provincial (or state) governments would allow companies to keep more workers on the payroll, invest in new technologies and capital resources, and expand their businesses.
The Democrats pledge to keep the automakers going is a fruitless adventure into more corporate welfare and corruption that will only lead to another "needed" bailout in 10, 15 or 20 years. The same is true for Canada. Any bailout would have to be coordinated with the United States for any remote hope of having even a minor effect. Even if such a bailout would work, which I strongly doubt, it should only take place after bankruptcy protections are utilized to renegotiate union contracts and obligations to debtors.
An investment in infrastructure is nice, but its effects would be felt for some time. Government moves very slowly, by the time ground was actually being broken, the economy might be in far worse shape or well on its way to recovery.
A US Republican, Congressman Louie Gohmert, has proposed a tax holiday for businesses and individuals in the first two months of 2009. This would involve the same amount of funds as the stimulus package which has proven useless so far. Gohmer argues:
"We need to give this money to the people who earned it. I am sick of Washington millionaires trying to decide which of their cronies should get the next wad of taxpayer money," Rep. Louie Gohmert continued. "Think about how much you would have if you didn't have any social security or income tax withheld from your pay check, or if you didn't have to pay those taxes for January and February! Americans could take and invest their own money where they believe it should go - to paying down mortgages, buying a new car, making credit card payments. The economy would get relief where it is needed the most. Why try to decide how to prevent foreclosures? Just give taxpayers their own money to catch up on their payments. Those in lower income brackets who are hit the hardest by the FICA tax would see huge money back, and then THEY could choose who should benefit from their hard earned money. Even the self-employed and small business owners would receive a fantastic amount of their own much-needed money, and they will be able to invest that back into their businesses and even create the ability to hire more people.”
This is the best idea out of Washington in decades and it deserves a good, hard look. It would certainly help me pay my school loans and car payments, and I suspect a lot of tax payers would welcome this option over the corporate welfare and bureaucratic waste that is the norm in Ottawa and Washington DC.
