Ever notice the multitude of politicians lining up to proclaim that America needs more jobs? But what do they “talk up”?
Not a one…and I mean not a one, states that what we need is for everyone to start buying more stuff.
Put more succinctly, if individuals who are already working bought more goods, there would be a need for more jobs to fulfill the demand for these goods.
Yet to a man or woman the only thing offered by our elected representatives is the same mantra: offer corporations a tax holiday, so they can repatriate earnings from overseas; lower tax rates for corporations; deregulate businesses; or, offer more tax incentives for businesses.
Based upon the above one might believe that businesses and not consumers, are the driving force behind America’s economy.
These may be great ideas, however, let there be no mistake, the primary driving force behind Adam Smith’s “invisible hand” of sustainable economic growth is consumer demand and not business output!
Now in order to invigorate consumer spending I offer the following thoughts and proposal:
The United States’ modern day tax scheme came into being back in 1913 with the Sixteenth Amendment of the US Constitution. We refer to this structure of taxation as being “progressive”. “Progressive” in the sense that the more you earn the higher your tax obligation should be.
However, I believe it is apparent that the progressive tax system is being re-designed to wipe out the middle class individual’s ability to write off anything, thereby in effect destroying the true nature of progressive taxation and as a consequence the middle class.
For instance did you know from 1913 until 1986 individuals could write off the following expenses: most forms of personal interest including automobile and credit card interest; all forms of taxes aside from federal including income tax and all sales taxes; and as an employee of a business, any expense you incurred on behalf of that business without itemizing or being subjected to an arbitrary 2% gross income floor, or a diminishing ability to take advantage of this write off once you hit a certain income level.
Therefore, to encourage individuals to spend right now, I propose that we re-enact these very same deductions in the same manner that they used to exist for nearly seven decades.
Great idea you say, I could really use the money, but what can I do?
Well the average middle class consumer has no lobbyist protecting his interests in Washington D.C. So you need to contact your elected officials. Who has the time to do this?
The only incentive I can offer you to act upon this idea, is to take away from my discussion the following fact…when it came to modifying the tax code in 1986, the harshest burden for payment of taxes was ultimately placed on you, the working middle class hero.
Why?
Why not!
Surely had there been any lobbyists “watching your back” on Capitol Hill back in 1986 the aforementioned deductions would have never been obliterated, or modified in such a manner that it wiped out your ability to use them.
No in order to get anyone’s attention you will need to call, or write your elected officials.
Here is a website that will, hopefully, make this easier for you.
http://www.usa.gov/Contact/Elected.shtml
Burdensome I know, but as I said the middle class consumer’s lobby does not exist.
Tell them “Bring back my tax write offs which were eliminated in 1986! Businesses still get to use them I should too, because after all it is my spending that generates the business of America!”
If they give you some nonsense about balancing budgets, tell them to remember that capitalism’s “invisible hand” will be put back into play here.
If that doesn’t float their boat, try this quote: "We don't have a trillion-dollar debt because we haven't taxed enough; we have a trillion-dollar debt because we spend to much." Ronald Reagan.
Or even more apropos, "In today's economy, fiscal prudence and responsibility call for tax reduction even if it temporarily enlarges the federal deficit – why reducing taxes is the best way open to us to increase revenues." John Fitzgerald Kennedy
In other words be as sympathetic to their concerns as they are to your burden of paying this debt and hit ‘em below the belt with quotes by the greatest leaders that either major political party has ever known.
I honestly believe that if they understood the economics behind this proposal, they would see what these leaders knew, placing more wealth in the hands of the individual will encourage spending to such a degree that any loss of revenue will be more than offset.
Timidity did not stop John F Kennedy or Ronald Reagan from cutting taxes for everyone. By re-enacting these targeted tax deductions in the same manner as they used to exist, it will significantly enhance spending by individuals, work to revitalize the economy almost immediately and create jobs now!
