Diary

A Two-Month Tax Holiday Would Provide Immediate Relief to Taxpayers

When the country is facing dire economic straits, those who believe in free market principles must stand together behind proposals that steer us toward enabling the private sector to work as intended and away from socialism. It was disappointing to read a release from the Heritage Foundation, a source of many good friends who normally support less government and less taxes, which demeaned proposals to cut taxes next year by about 17%.

My proposal is an alternative to the continued declaration of a financial king in America, currently named Paulson, who has a $700 billion slush fund that is down to $350 billion.

I will have a bill to file as soon as we go back into session which would end authority of the financial king to further squander hundreds of billions of dollars in hopes of causing more credit to be extended which will further hopefully allow currently failing mortgages to get loans that will allow them to no longer be failing which is further hoped will eventually give more confidence in purchasing mortgage-backed-securities that will eventually help confidence in the economy which will eventually result in ending the paranoid schizophrenia in the stock market that will allow our economy to return to better health.

Rather than utilize such a tenuous and subjective aspiration for one man’s usage of $350 billion, I have proposed to allow the entire realm of United States workers to utilize all of that part of $333 billion that each such worker earned himself or herself. By allowing each worker to have the first two months of 2009 federal tax free, it amounts to a 2/12 or nearly 17% reduction in income tax for 2009. Although most of the brilliant intellects at Heritage applaud lower taxes, one there has written that such tax reduction is not a good idea.

The Heritage writer goes on to opine from distant grandstands how much more preferable it would be to end the estate tax, drop the capital gains tax, have long term tax relief, along with similar long-held desires of conservative, free market, less-government believers like me. And I agree. He and I have a political disagreement, not a substantive one.

I think – given the vehement opposition to any real tax cuts among the Democrats – I’ve judged the tax holiday, as difficult as it will be to pass – attainable with the right support by the American people. To dream about ending the capital gains and estate taxes is all well and good. But in the bare-knuckled politics of December 2008, it’s just that: a dream.

Apparently, it takes someone a great deal smarter than me to rationalize how the 17% reduction of taxes for one year is a bad idea since we cannot insure that it will go on for more years after that. The Heritage writer further opines that people spending their own money that they themselves earned which otherwise would go to the squandering whims of King Paulson or his successor may cause them to develop bad habits of spending their own money. What the heck is that all about?

How wonderful it would be to pass extensive long-term tax relief to individuals while cutting corporate taxes that have sent so many companies scurrying abroad. It would be great to watch our economy pick up some of the manufacturing jobs we’re rapidly losing to countries with lower corporate taxes. I also would love to see Americans have more money to save, spend, and invest not just for one year but for many more to come. Unfortunately, some of us have to deal with the world the way it is (not our abstract ideas of the way it should be) and work tirelessly toward the great day we hope to achieve more freedom and less government in the future. Because while we battle on the field toward the goal line, we know that many non-players will sit in the stands and talk about how they would have already scored a touchdown and won the game and had a winning season if they were on the field themselves. How nice.

No matter how you want to label it, a two-month tax holiday would provide immediate relief to taxpayers and would constitute a nearly 17% tax cut for 2009. Whether Americans save, spend or invest it, a two month tax cut will boost an economy that needs immediate relief. Sure, a Treasury Secretary or a Fed Chair may be able to throw another $7.7 trillion at the problem in hopes that credit might return enough to allow borrowers in failing mortgages to eventually restructure their loan or borrow more so they will no longer be classified as failing. OR, how about letting workers keep ALL of their federal income tax and FICA withholding for two straight months, use that to catch up on their mortgages so they truly are no longer failing?

It is true that there are other types of failing mortgages that even this will not cure. I was advised of someone who had purchased a $700,000 home because they could get it for nothing down and no payments till the end of the year. Their hope was to sell the house before twelve months and make a huge profit on the house. However, it lost value instead of gaining and now the employed, well-to-do borrower has one of those failing mortgages and needs help to stay in the home. Here’s a news flash: take the loss and move to a $350,000 house. You’ll be ok with a little time, and we shouldn’t come up with a way to keep you in the house you should not have bought.

The head of the bailout oversight panel recently stated that it does no good to bail out banks when consumers have no money to spend. A Heritage writer is on record supporting the $700 billion bailout, but not the tax relief to citizens that conservatives should be supporting. It is still proof that as fantastic as Heritage is in upholding the principles on which this great nation was founded, even this foundation that I love and support is not perfect.

Our country needs help right now and we have to deal with Democratic Congressional majorities and either a lame-duck GOP administration advocating socialism or a new Democrat administration. The American people and the market are ready for an alternative to bailouts that just aren’t working. They are ready to finally get their own relief after seeing some of the people who got us in this mess get bailed out repeatedly. Passing a two month tax holiday and ending the remaining bailout authority is an idea any politician who cares about the taxpayer can and should support. Lawmakers will be hard pressed to say no to a loud majority of Americans calling for tax relief and an end to bailouts. The way I see it, we are faced with a very simple choice between the taxpayers’ wallet and the bureaucrats’ budget, and the way things stand right now, my choice is the former.

Unfortunately, this call won’t come if those championing tax relief principles that got Reagan Democrats on board are being shot at from their own fans in the stands because it is not the long-term strategy the fan would use. We need to work together now on what is possible and essential, all while we continue to move in the same common direction of less, more efficient government and more power to the people.

Our goal is long term relief also, but ending the move toward socialism and the kingly powers in one man while cutting taxes so the taxpayer has a chance to help the economy and himself for one year is a very nice start.