Wednesday, December 17, 2008

A Two Month Tax Holiday In 2009

350 billion dollars are left to be spent from the 700 billion dollar bailout bill spearheaded by Treasury Secretary Henry Paulson, approved by Congress and signed into law by President George Bush.

Certainly, it should be interesting to see what the United States Congress spends hundreds of billions of taxpayer money on, after the new year.

The most likely outcome of this bailout bill spending spree will involve a massive transfer of wealth from taxpayers to government-directed projects. The sad truth is that it will be years before these government projects actually produce any jobs.

However, there is one idea on Capital Hill that does seem to make a lot of sense. As a result, there is probably little chance that it will gather the necessary votes in Congress to become law in 2009. It is a radical idea for sure. The concept is to give much of the remaining taxpayer bailout money back to help the individual taxpayer.

The bill is HR 7309 and was recently introduced in the House Of Representatives by Rep. Louis Gohmert, R-Texas. HR 7309 would require all federal income taxes based on wages earned and FICA withholding be left in paychecks for two straight months in 2009.

The effect of the legislation would be to dramatically increase each worker's take home pay for two months. The result would be economic stimulus in it purest form. Even wage earners who do not make enough to pay income tax would get back their FICA or Social Security withholding under the plan

A two-month reprieve from payroll and FICA taxes would cost $334.4 billion, much less than the remaining $350 billion in bailout funds authorized by Congress. It would represent a 17 percent reduction in income taxes for Americans in 2009.

Of course, the problem for our big government, Congressional legislators is that Americans would get to experience the impact of how much the federal government takes from their paycheck every month in taxes.

So, a two month tax holiday to stimulate the economy will probably never happen. Big government projects, pork barrel spending and Congressional earmarks that feed off of the taxpayer's bailout bounty will likely be the Congressional solution for economic stimulus in 2009.

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