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Imported Pony
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| The Horses Blog |
How the hell are tax breaks gonna help us get out of this recession?
Didn't we learn anything from last year's tax rebates? Remember all that money that went right back to China, where it came from? The republicans are a one trick pony. Don't they ever learn from past mistakes? How can we spend our way out of a recession when we live on imports? Why borrow more money from China, just to give it back to China?
I notice that most of you choose to ignore that our industry has been shipped overseas. We live on imports. We spend; it leaves the country. Quite a coincidence that it goes right back where it came from. Rebate or tax cut, it will be spent on imports. WE DON'T MAKE ANYTHING IN THIS COUNTRY ANYMORE.
Yeah Apollo! And isn't it something, that while the Fed and the government are giving all this money to the banks, presumably because they're "too big to be allowed to fail", that they're also asking some of these corporations to merge and become even larger? Dumb? Dumb doesn't begin to describe what's happening. It's criminal!
Tax credits for purchasing new homes, for a limited period of time, and tax credits for purchasing new more fuel efficient cars are two examples of where tax breaks can encourage consumption in two troubled areas of our economy. Consumption at this level is what is required to stabilize our economy, so developing temporary tax policies to encourage the same is not irrational.
What is irrational is just giving everybody a small tax break and hoping it helps the broader economy instead of targeting key industries that have a direct impact on our economy and offer a large multiplier effect.
A $25,000 tax credit for buying a new home would help. Buy in 2009 and you get to claim a $5,000 tax credit for each year you own the house and occupy it as your principal residence. Buy in 2010 and it's a $20,000 tax credit, buy in 2011 and it's a $15,000 tax credit, buy in 2012 and it's $10,000 and buy in 2013 and the credit is only $5,000, after which it phases out.
A tax credit for purchasing a new fuel efficient car that is greater or smaller according to the car's gas mileage makes a great deal of sense. Mark Haines at CNBC first touted this idea months ago. It makes even more sense now, but I don't know what the size of such a credit should be.
Take care.
