Professor Elam

Okay, all the ideas we have so far to 'stimulate' the economy consist of the government sending all of us a check. Here is a different line of thinking. How about a two month Federal Tax Holiday, the government does not collect any payroll or income tax for two months?  Well unless we lower income tax rates that would leave all of  us short at income tax payment time but….

Here is the idea and from a Texas Congressman no less.

Over the weekend, Newt Gingrich sent me information on a plan to stimulate our economy.  The plan is from Texas Rep. Louie Gohmert.  Yes, he's an Aggie.  But this plan is so brilliantly simple that I have yet to have anyone give me one real reason why it wouldn't work.  I've had callers suggest reasons why it would be politically unpopular … but that's different from not being workable.

Here's the deal.  Gohmert proposes a two-month tax holiday where the federal government would not collect any taxes from individual Americans.  No income taxes.  No payroll taxes.  You would keep all the money that you earn for two months.

Now this is a statistic that should shock you … Americans pay over $101 billion in income taxes and $66 billion in FICA taxes every single month.  That means that if Gohmert's plan went into effect, there would be over $330 billion in American pockets.  That is money that you have earned and money that you can decide where it is spent or saved.  You pick the economic winners and losers with your money – the government doesn't get to do the choosing for you.  The government can't use it to pay executive salaries for failing companies or subsidize failing UAW contracts.  The government won't spend $50 million just to send every American a letter saying that their pithy "stimulus" check is on the way.  That's it … you just stop all federal taxes for two months.

Will it cost us anything?  Well, no more than has already been pledged in the bailout bill.  There's $350 billion left there … this would eat up most of it. 

Gohmert says that this will create a surge in the economy because more people will have the money to buy cars, build homes, pay their mortgages, pay off their credit card bills.  It would even help the states that are currently lined up at the federal government bailout trough.

Naturally there are people who think this idea is absurd .. "Give ME the power to spend the money that I earn where I'd like?  That's outrageous!"  Here's an email I got from someone who thought it would be cute to use a fake name .. but here's the line of thinking:

Neal is the most stupid talk show host ever lived. How so? His idea of giving Americans a 2-month tax break shows how stupid he is. While he's probably saving $2000, Bill Gates saves $2 million. That's like giving the rich a raise. If you let idiot like that to run the country, it will be run to the ground like George W did it.

First of all, this isn't MY idea.  It came from Rep. Louie Gohmert.  And secondly, how envious and mindless can one person be "That's like giving the rich a raise."  Yeah .. the evil rich.  The source of all that is bad in America.

You'll hear more about this on the show and here in the Nuze.  One thing for sure.  Politicians won't like it because this would allow the people to clearly understand just how much money the federal government is seizing from their paychecks every week.  After the two month holiday, when withholding kicks in again, there might even be something akin to a tax revolt!  The only way this would work is if came from the ground up .. that means the voters up.  Let your congressman know how you feel.

Yes I waded off into political policy, but accountants who are famous for figuring tax returns rarely participate in the tax policy debate. Income tax witholding did not exist until World War II.  it was adopted to help 'finance' the war. Congress realized of course just how much money this let them have, wihtout taxpaers realizing it. That would be because the taxpayer never had the money nor wrote a check for it, bingo outta sight outta pocketbook. So Congress quietly let the witholding law stand as the War ended. bingo Congress still gets your money first.

As Boortz says (this is extracted from the Neal Boortz website) the idea will probably not get any traction. Once everyone realized just how much they are paying the Fed Govt (and for what pray tell) there would be little chance to start up witholding again. I doubt this idea will come up for a vote on the floor of Congress.