A common sense plan–don’t worry, it’s dead on arrival!
A common sense plan—don’t worry, it is dead on arrival.
The country is sinking into the worst economic crisis, perhaps since the great depression. Our government has now given billions in bailout monies to banks, insurance companies, and other companies that have been arbitrarily declared to be banks.
And, of course, here is the shocker! A lot of the money has been misspent, misused, or simply cannot be accounted for. Money that was to bailout these companies has instead gone for expensive corporate retreats and expensive bonuses to the very executives who drove the companies into the ground. I guess these guys learned well from congress and perhaps their handling of the bailout money suggests they are auditioning for a second career: as a congressman!
One congressman has suggested a brilliantly simple plan. Instead of giving more money to be wasted by these corporations who aren’t doing a very good job of it anyway, he suggested a two-month tax holiday. That’s right, two months of not paying federal income tax.
In 1913, the most recent incarnation of the Federal Income tax was inflicted upon us. In 1913, rates went from 1% if your income was $3000 ($4000) for married couples to 7% if your income was over $500,000. I don’t know how those translate into today’s dollars, but if they were, I suspect you’d have to have an income of well over a million dollars before you had to pay income taxes.
Income taxes were dramatically increased during the great depression and especially during World War 2. During WW2, the government was looking to streamline the process, so it created tax withholding. That way, your taxes were taken directly from your check and you never had to deal with them. Patriotic Americans, instead of worrying how to pay their taxes, would instead simply concentrate on building bombers and tanks and the other things needed to fight the axis. Withholding, like so many other things, was supposed to go away at the end of the war. World War 2 ended in 1945. As we move into 2009, we still have withholding.
The proposal for a 2-month tax holiday is a great idea. Unfortunately, it is dead on arrival. First, the democrats who now control congress want more taxation, not less. As a practical matter, they know what would happen. If Americans suddenly, even for only two months, received their entire paycheck, not just the net, there would be a war when the withholding system went back into place. Americans would want their entire check again. A few years ago, a Tennessee governor, when confronted with the idea of the imposition of a state income tax in Tennessee, said he opposed it because, among other things, it funded the easy, endless expansion of government. Liberal democrats have never met a tax they did not like or a non-military spending program, no matter how wasteful, they did not like.
So have no fear. As we sail into 2009, the party of endless government expansion and endless taxation is not going to let us keep our money!