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Personal Income Tax Policy 02/28/09 The stimulus effort needs to put as much money into the hands of people as soon as possible. Massive deficit spending is underway with the passage of the $787 billion stimulus package. The President has announced with his planned budget that he plans to let the Bush tax cuts for the top 2% expire at the end of 2010. They should be rescinded now! There is no good reason to wait. Further, we should go beyond that to roll back the Reagan tax cuts. We need to move as much money as possible from the sidelines in the accounts of the wealthy to consumers. President Obama certainly knows that. He is too concerned with his relationship with Republicans in Congress. At some point soon he must accept that the Republicans will be a thorn in his side regardless of what he does. With Franken seated he has a potential 60 Democrat and Independent votes to end filibusters in the Senate. Republican arguments against rescinding tax breaks for the wealthy center on the false premise that it will hurt small business. But, we are not talking about a business tax. The personal income tax only applies when money is taken out as salary. It is not on business receipts. It actually encourages business expansion in that a business owner can decrease his taxes by expanding his business rather than taking the money out in personal income. Portions of the following were written as early as 2006. So, the backdrop is the era when we could have produced a budget surplus. Today, the same actions will not produce a surplus but will lessen the deficit.
All of this will add up to over $750 Billion in increased revenue each year. In the process, the tax code will be simplified. These changes will not hurt the economy; they will help. Note again that this has to do with personal income tax. If, for instance, a small business owner chooses to apply potential profits to expanding the business, that money will not be personal income and will not be taxed. Thus, raising the rates on high personal income will encourage business expansion. As a related matter, I would favor help for small businesses in terms of increased allowances for single year depreciation of equipment purchases. As an economic decision we must go to Single Payer universal healthcare. In addition to being fair and humane, Single Payer will benefit the economy. It will lighten the load on businesses both large and small. This will give American businesses a more even playing field with foreign companies which do not pay the health care costs of their employees. As American companies become more competitive and employ more American workers. that will provide another boost to the economy. We can get a spiral working to our benefit. Doing the right thing tends to be win, win, ...
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