Hope: Economic relief??

Discussion in 'Economy' started by jreeves, Jan 19, 2009.

  1. jreeves
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    jreeves Senior Member

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    Permanent Tax Relief - Not Tax "Holidays" - Stimulates Economic Growth
    It has grown fashionable in the media and in Washington to assume that what the economy needs right now is a quick stimulus, or "jolt," by putting cash in the hands of ordinary Americans--or government agencies--that they go out and spend. The theory is that people will take this money, go out and buy things, and this spending spree will reignite economic growth. Economists often refer to this as a "Keynesian" fiscal stimulus, named after the late British economist John Maynard Keynes.

    A tax version of this idea has been embraced by some Republicans as well as Democrats. Their proposal: Americans would receive temporary tax rebate, or a "tax holiday" for a few months during which they would pay no federal taxes.

    To be sure, letting Americans keep their money rather than sending it to Washington means it is more likely to be used wisely. But if the additional goal is to spur economic growth, this tax "jolt" will have little impact. Fiscal policy in the form of short-term tax holidays, or temporary spending jolts, will not rekindle economic growth; only long-term reductions in marginal tax rates on capital and work will accomplish that goal.

    Long-term tax rate reductions--as opposed to short-term jolts--are needed because the important economic decisions that will trigger a real recovery depend on more investment in new factories and new equipment. Americans are more likely to make these investments when they believe that there will be a long-term improvement in the after-tax returns to investing, working, and taking economic risks. Such improvement requires long-term marginal rate reductions, not a temporary shot-in-the-arm.

    The Treasury presses are going to be running non-stop over the next four years and Americans can expect no help from a liberal government only worried about spending more of their money.
     
    Last edited: Jan 19, 2009
  2. Paulie
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    Paulie Platinum Member

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    A jreeves sighting!
     
  3. Annie
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    Annie Diamond Member

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    I agree. Right now any money I get to 'keep' will be used to pay off debt, whether credit card or getting ahead on my mortgage.

    I doubt I'm alone. This year I spent about $350 on Christmas, last year over $1800. Dinner for the day, $300, last year almost $500. (Yes, lots of left overs, but that wasn't the point.)

    In the past 2 weeks I changed my kids auto policies from 'Comprehensive' to 'Collision', saving myself over $100 per month. If they are 'at fault' they'll have to pay their own repairs. I changed my cable from "Premiere" to Dish with 200 channels, saving about $35 a month. I changed my phone service to 'use only' and ditched the cell I use about 4 times a month, saving over $120 a month. More cuts coming...
     
  4. Paulie
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    Paulie Platinum Member

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    Ah, cuts are no fun. I'm taking a home equity mortgage to buy a boat for this summer. My neighbors have boats, and I don't. My life isn't complete.
     
  5. Annie
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    Annie Diamond Member

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    Nope, but necessary. You will live without a boat. I'll live without those really cute black slacks and great top, not to mention the Coach clutch I've been coveting...
     
  6. Paulie
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    Paulie Platinum Member

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    I was being sarcastic, I probably should have used a smiley.
     
  7. Annie
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    Annie Diamond Member

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    No, I got it. I was doing the same. :beer:
     
  8. indago
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    indago VIP Member

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    Well that's just fine for those who are working, but what about those who have lost their homes, jobs, families, and are living in a makeshift tent in the woods in this freezing weather?
     
  9. jreeves
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    jreeves Senior Member

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    I know it's been awhile, but I'm back.
     
  10. Annie
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    Annie Diamond Member

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    I haven't seen those stories, got a link? Could this be the first Democratic president with a growing homeless population? :eek:
     

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