Not a consumption tax, but a consumption tax break?

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    Dec 20, 2011 1:03 AM GMT
    OK, so everybody knows we're in a liquidity trap. I.e. spending isn't enough, and gold/treasuries/bank accounts are where people are stashing their money, despite record low interest rates.

    Republicans like tax breaks for everyone (assume for the moment they will pass the payroll tax deduction).

    Democrats (and most economists) like short term stimulus, whether it's done by the government or privately.

    What about combining the two of them into the following:

    For every dollar amount below a certain threshold (e.g. $50k, but can be any number), if you can prove that you didn't stash it in the bank, buy stocks or put the cash under your pillow, you get that amount taken off your tax return.

    You can buy yachts, expensive cars, or just essential things for life. You can even give it to charities.

    Do this until the employment rate hits 7% or whatever we think is a good point to taper off the stimulus.

    Yes, the IRS will be busy for a while, but imagine how much more spending there will be.
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    Dec 20, 2011 2:25 AM GMT
    wait - what?


    make lifestyle sacrifices?

    NOOOOOOOOOOO!!!!!
    icon_twisted.gificon_lol.gif
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    Dec 20, 2011 4:45 AM GMT
    At the Dillard's clearance outlet today where I broke down to buy hopefully my last pair of fat jeans and fat shorts (I'm down 15 lbs from my deep depression high, 20 more to go), the guy I was chatting with online by the cash register told me he'd recently read an interesting statistic which I have yet to find a source to confirm but I thought it interesting that someone took a look at this:

    62% of Cyber Monday purchases, which, as we know, are mostly put on credit cards, were bought by people in foreclosure.

    If that is true, then what you are proposing is that we should give tax breaks to people who are spending money they don't have so that we can be later further fleeced by banksters "collecting their fees".

    The good news is that I paid cash $13.02 for a retail $70 shirt and $14.98 for retail $80 shorts. Will I be getting my tax refund based on the retail or the discount price please?

    Oh, and PS, when I told this story to my cousin earlier today, she mentioned a friend of her boss who recently purchased a yacht, based in part on the mortgage money he hasn't paid in the last 2 years.
  • no1timehookup...

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    Dec 20, 2011 7:53 AM GMT
    I say Obama needs to stand up to those Republican imcrumblents.. Democrats want tax cuts for the middle class, Republicans want tax cuts for the 2% filthy rich.. I think CEOs of big corporations such as wally world etc. can withstand a tax increase.. I say if congress doesn't get this bill past, LET THE GOVERNMENT SHUT DOWN.. Hopefully in 2012 these imcrumblents will be voted out..
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    Dec 20, 2011 12:24 PM GMT
    @theantijock:

    Of course consumer debt has ballooned during this recession, but it's no different from previous recessions. But interestingly, US household debt to income ratio has been the lowest since the 1990's:

    debt.jpg

    And if there were a way to target a consumption tax break towards those that actually have money rather use credit to get the tax break, that would be best.

    I read this on wikipedia:
    http://en.wikipedia.org/wiki/Consumer_debtIn recent years, an alternative ]post-Keynesian] analysis might view consumer debt as a way to increase domestic production, on the grounds that if credit is easily available, the increased demand for consumer goods should cause an increase of overall domestic production. The permanent income hypothesis suggests that consumers take debt to smooth consumption throughout their lives, borrowing to finance expenditures (particularly housing and schooling) earlier in their lives and paying down debt during higher-earning periods.

    Both domestic and international economists have supported a recent upsurge in South Korean consumer debt, which has helped fuel economic expansion. On the other hand, credit card debt is almost unknown just across the sea in Japan and China, because of long-standing cultural taboos against personal debt. Theoretical underpinnings aside, personal debt is on the rise, particularly in the United States and the United Kingdom. However according to a recent report U.S. household debt is at the lowest level for 6 years.[2]


    I have absolutely no debt at all, except for month-to-month credit card debt which I pay off right away.

    As for the discounted price of your shirt vs. the marked price, of course it should be the discounted price that counts, since that's what you spent. Phantom money does not stimulate the economy.icon_lol.gif
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    Dec 20, 2011 1:52 PM GMT
    no1timehookups saidHopefully in 2012 these imcrumblents will be voted out..
    It's impossible to vote out something that makes up 100% of the choices to vote for.
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    Dec 20, 2011 1:56 PM GMT
    paulflexes said
    no1timehookups saidHopefully in 2012 these imcrumblents will be voted out..
    It's impossible to vote out something that makes up 100% of the choices to vote for.
    We can poison the DC water supply! icon_wink.gif
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    Dec 20, 2011 7:04 PM GMT
    q1w2e3 saidOf course consumer debt has ballooned during this recession, but it's no different from previous recessions. But interestingly, US household debt to income ratio has been the lowest since the 1990's:...And if there were a way to target a consumption tax break towards those that actually have money rather use credit to get the tax break, that would be best.

    I read this on wikipedia:
    http://en.wikipedia.org/wiki/Consumer_debtIn recent years, an alternative ]post-Keynesian] analysis might view consumer debt as a way to increase domestic production, on the grounds that if credit is easily available, the increased demand for consumer goods should cause an increase of overall domestic production. The permanent income hypothesis suggests that consumers take debt to smooth consumption throughout their lives, borrowing to finance expenditures (particularly housing and schooling) earlier in their lives and paying down debt during higher-earning periods....

    I have absolutely no debt at all, except for month-to-month credit card debt which I pay off right away...

    As for the discounted price of your shirt vs. the marked price, of course it should be the discounted price that counts, since that's what you spent. Phantom money does not stimulate the economy


    Yes, I'm not saying your idea is entirely without theoretical merit and it reads much better when you stipulate rewarding cash, not credit. But in today's wacky world, when so many are not sending their mortgage payments to the bank, but using them for luxuries like vacations while they live in "their" houses for free, will you be counting that cash as credit or as cash? Could this just be another door to abuse?

    Then there's that little matter of my discounted clothing. Since the retailer normally marks up 300% but I bought at 80% off that price, they get a tax write off & I get a tax refund on the same item? Where's all that money coming from? Or do we stop paying the mortgage on our monuments so we can stimilate the economy?

    And as to paying off credit later in life, that presumes people will progressively make more money. As this world continues to industrialize, I'm not convinced this will be the case. Many people are making less money now then they made 20 years ago. Tough to pay down years of accumulated debt on that.
  • Posted by a hidden member.
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    Dec 20, 2011 8:24 PM GMT
    q1w2e3 saidOK, so everybody knows we're in a liquidity trap. I.e. spending isn't enough, and gold/treasuries/bank accounts are where people are stashing their money, despite record low interest rates.


    Nothing like a period of high inflation to stimulate spending! [Just joshing here]