Posted by
Steve Rathje on Wednesday, March 04, 2009 12:00:00 AM
My Fellow Citizens
There’s no doubt that folks are worried about, and/or biting their lip, in regard to the irresponsible proposal that the Obama Administration/Democrats have rammed through the US House and Senate regarding “stimulating” our economy. So in response to their irresponsibility, I have put together a real “Stimulus Package” over the past several weeks that I presented via internet to the American people at 5:00pm Saturday Feb. 21. I encourage you to review it, and please share it with as many folks as you wish.
As usual, your input and comments are most appreciated. Since releasing my 'Stimulus plan', I have been asked to be a guest on various shows to discuss this program in contrast to the Obama/Pelosi bill.
My three-pronged proposal uses simple economics to provide a tangible solution to the economic struggle that our country currently finds itself in. This plan can be accomplished at a fraction of the cost presented by the Obama Administration and the Democrats, and provides a meaningful benefit to American families and businesses by creating more jobs and putting your money back into your pockets. My proposal will allow businesses to create more jobs which will encourage continued, instead of short term growth, the kind of growth that will bring us out of this economic slump that will only be exaggerated furthered by the Democrats current plan.
Remember, their plan is “spending plan” which provides no lasting effect on our economic well being. My plan, on the other hand, will provide real money that can be used to purchase a car, a home, education, to pay lingering bills, or simply provide a down payment on your future. My plan is a three page, common sense, successful solution to a nationwide economic problem compared to 1,071” pages of wasteful irresponsibility.
Proposal: 60 Day Income Tax Holiday
(billions) source. American Solutions
Americans currently pay monthly:
Income Tax 101.0
Payroll Tax 65.6
Corporations pay monthly:
Payroll Matching Tax
65.6
Cost of 2-month tax holiday:
464.4
Stimulative Benefit to Economy (using Moodys "Bang for the Buck" formula)
Income Tax Holiday (1.03)
208.1
Payroll Tax Holiday (1.29)
169.2
Corporate Payroll Tax Holiday (0.3)
39.4
Total Stimulative Impact:
416.7
Net cost of Payroll tax holiday: 47.7
Potential Jobs Saved/Created -- (Corporate Payroll/Holiday only/assume $50,000 salary plus benefits)
$2624.00
$778 billion Stimulus Bill:
Weekly Monthly
$464 billion Proposal - Monthly: 13.00 52.00
$289.81 $1,159.22 289.81 1159.22
$464 billion Proposal - Annualized: 44.59 178.34
$44.59 $178.34
*Assume $50,233 annual household income (Census Bureau)
Summary of Proposal
The total income and payroll tax revenue collected by the government is right at
$464.4 billion every two months. Given that, I'm proposing the following;
First we declare an
income tax, payroll tax and corporate tax holiday for 60 days. In
other words, the
government does not take any federal taxes out of your paycheck for
60 days. This reflects an immediate $416.7 billion stimulus impact to the economy and
relief to everyone earning a paycheck in the United States.
The total loss in tax revenue to the government translates to around
$47.7 billion
which is the difference between the cost of a tax holiday and the total stimulative
impact. I estimate that the tax break on the corporate payroll tax match alone will
enable corporations to create/save up to
2.6 million jobs averaging $50,000.00 per
year. In addition, consumers will have an average of
$290 per week in their pay
checks to use as they see fit. The stimulative impact would be immediate vs. the
2
years in the Obama/Democrat package. The benefit is fair and easy to calculate, 1/3
of most Americans' pay checks. The people in the lower income brackets that
normally get hammered stand the
most to gain.
Proposal: Reduce Average Income Tax Collected from
30.8% of Income to 25% of Income
(billions) (tax rate)
Source: American Solutions (Income), Tax Foundation
Monthly Income Tax: 101.0 31.0
Proposed Income Tax: 82.0 25.0
Total Monthly Revenue Reduction: 19.0
228.2
Source: Moody's
Stimulative Benefit to Economy (1.03) 235.1
Net Benefit of Income Tax Rate Reduction Proposal Proposal 6.8
Total Annual Revenue Reduction:
Source: Moodys
Stimulative Benefit to Economy (1.03)
$235.1
Net Benefit of Income Tax Rate Reduction Proposal:
$6.8
Extra $ in Paycheck under: Stimulative Benefit to Economy
Weekly 13.00 52.00
Monthly
$778 billion Stimulus Bill: 33.11 132.43
*Assuming 50,223 household per househhold income data (Census Bureau)
$228 billion Proposal:
$33.11 $132.43
*Assume $50233 annual household income (Census Bureau)
Summary of Proposal
After the 60 day tax holiday, income taxes fall from 30%-25%.The permanent,
across-the-board decrease in income taxes will add $33 to the average weekly
pay check, or over $132 per month. That's the kind of money that can help buy
a car, save a house, and do any number of other things certain people in the
government are convinced only government can do. My proposal puts the
money into the people's pockets, and empowers them to save themselves.
Proposal: Reduce Corporate Income Tax Rates from 35% to 15% Source: CBO
(billions) Tax rate
Annual Corporate Income Tax Revenues (2008): $304.0 35.%
and proposed income tax revenues): 130.3 15 %
173.7
52.1
Net Cost of Corp Rate Reduction Proposal 121.6
Potential st of Corp Rate Reduction Proposal
the value of each job created (assuming 50k each salary to income and payroll 3,474.286
taxes) 15,000
Summary of Proposal
The current corporate tax rate in the US is 35%, the 3rd highest in the
world which translates into an annual tax revenue of $304 billion. This is
crippling U.S. businesses and forcing them to do business
overseas or to Mexico.
I want to reduce that tax rate to 15% which translates into $130 billion in
annual corporate tax revenue. That puts $173 billion back into the
corporations. Now, not all corporations will reinvest in themselves, but I
have good reason to believe that at least 97% will. That is $173 billion
dollars of instant corporate stimulus to invest in technology, machinery,
brick and mortar and JOBS.
According to Moodys; a permanent reduction in corporate income tax
rates would provide a stimulative benefit to the economy of 30 cents for
every dollar of tax reduction, or $52.1 billion dollars, and much more after
taking into consideration that people will spend it. Therefore, the NET
cost to the government or loss of tax revenue would be $121.6 billion
dollars. Which would be made up due to the potential creation of up to
3.5 million jobs averaging $50,000.00 per year in wages.
Each new job has an annual tax benefit to the government of $15,000 in payroll and income
taxes, which means every million new jobs puts $15 billion annually into
government coffers. As you can see the potential jobs created or saved
equal the $778 billion Obama/Democrat "Spending" bill for a fraction of
the cost.
Now, that is change we can believe in!!
Thank you!!