Tell George Bush I have his economic stimulation package... right here
Filed under: Borrowing, Debt, Shopping, Tax
If George W. Bush wants to do something to stimulate the economy and cement a positive legacy for himself, I have his magic solution right here. If he could get this done, he'd salvage his entire presidency. I'll warn you right up front though, Democrats won't like this idea. So, if you are of the progressive socialist ilk, you may want to move to the next blog post right now. Here's my plan.If even only temporarily, we need to make the interest charged on consumer debt tax deductible. If I'm not mistaken, didn't they do away with that consumer perk sometime in the mid seventies? If I'm right, and that was part of the old tax code, we should reinstate it immediately. If it's a new and original idea of my own, please leave a dollar in the hat on your way out.
By making consumer credit interest charges tax deductible (again), we'd get an economic triple play. First, consumers would get excited knowing they could finance stuff again, Second, they'd get those interest charges back as tax credits. Third, banks could get a helping hand because consumers might step up their borrowing activity again. The government would just have to bite the bullet and tighten it's belt.
There are only two facets to this plan which would require some serious attention in order to make it work. First, we have a majority of society which needs to be schooled in responsible credit usage. That means we have to teach them how to understand budgeting and what it means to over extend yourself. Second, we need a complete overhaul of the tax code from top to bottom. In fact, the enactment of a "Fair Tax" system might render this entire blog post moot.
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Reader Comments (Page 1 of 1)
5-01-2008 @ 7:37PM
Tracy Coenen said...
Gary - First of all, it's not the "economic stimulation" package. It's "economic stimulus."
Second, there isn't a "tax credit" for mortgage interest. It is a tax deduction, and there is a big difference.
I think we do have a responsibility to be accurate in our posts here.
And why would consumers "get excited knowing they could finance stuff again"??? When did they lose the ability to finance things?
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5-01-2008 @ 7:42PM
Zac Bissonnette said...
Boo Yah Gary!
First time long-time -- I'm actually sort of in awe of how bad of an idea you have here.
Why the heck should the interest on Caribbean cruises, lattes, and SUVs be tax deductible? I can't even imagine.
Traditionally, the idea of tax deductions has been to encourage things -- especially investments -- that were seen as having merit and therefore ought to be encouraged -- buying a home, student loans, etc.
In this era of a negative savings rate, huge budget deficits, etc. etc., why would we want to decrease tax revenue by encouraging irresponsible use of credit cards?
Oh -- and as for "If I'm not mistaken, didn't they do away with that consumer perk sometime in the mid seventies?", that was actually 1986.
Zac Bissonnette
WalletPop
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5-02-2008 @ 1:20AM
Tracy Coenen said...
No, what sucks is having material like this on the site.
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5-02-2008 @ 1:39PM
Bruce Watson said...
Actually, speaking as a Democrat-ish kind of guy, I like Gary's idea. Or, at least, I like the fact that it is aimed at helping people who are over their head in debt.
My favorite idea, though, is to do away with income tax entirely and compensate with a massive sales tax. Screw the bastards who are living off dividends!
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5-03-2008 @ 7:32PM
Gary E. Sattler said...
As commented:
"In this era of a negative savings rate, huge budget deficits, etc. etc., why would we want to decrease tax revenue by encouraging irresponsible use of credit cards?"
I interpret that portion of that comment as: -why would we want to take money from the government and return it to the people?-
Don't assume I want the interest paid on purchases of consumer toys to be deductible. But what about cars? What about tools for gainful employment? What about home office equipment, alternate energy installations, education expenses, or any other financed expense for the improvement of earning or saving potential?
The phased out deduction, which began it's disappearance in 1987, was sold to Reagan as tax reform. In that "reform", the top tax rate was set at only 28%.
Since that time, the top rate has climbed upward to 40%. There's your tax reform.
Now, the loonies in Washington are actually considering doing away with the mortgage interest deduction.
If you want deficit reduction you cut spending. If you want economic resurgence, you put earning potential back into the hands of the people.
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5-04-2008 @ 9:49PM
Jason said...
Sucks to get zinged by your fellow Walletpop bloggers. Just goes to show that Democrats would turn on their own parents if they thought they could get the votes.
hehe, just flamin...erm kidding :)
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5-08-2008 @ 11:08AM
surepuppet said...
If george w. wants to stimulate the economy why not lower gas prices to about 2.45 a gallon at least for the summer months. We did liberate a country why not now have part ownership in their oil for all of our sacrifices and costs.
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