Obama: It's NOT a tax cut!Submitted by MichaelMcC on Mon, 01/05/2009 - 21:08
Obama announced an outline of his "economic stimulus" program today. It included 300 Billion which was billed as a "tax cut".
For a moment I thought he might have SOMETHING on the ball. Nothing will be a long term SOLUTION except cutting government spending - and the "bailouts" have already blown that and committed the government to run on the printing presses. But a tax cut, increasing the fraction of money earned that is kept, would at least provide SOME incentive to engage in economy-stimulating behavior.
Then the details came out:
The so-called "tax cut" was a tax credit. (Well, not dead yet.) Then it turns out it's a LUMP SUM tax credit. The amount received is not dependent AT ALL on the economic behavior of the taxpayer. It's not a tax cut at all. it's a government handout program that happens to be administered by the IRS.
To be an "economic stimulus" any "tax cut" must be a cut on the AMOUNT of TAXATION of FUTURE ECONOMIC DECISIONS AND ACTIONS. Ideally this would be a cut in rates, though various other schemes (while less generally effective) could have similar effects. A flat handout is just another transfer of value from the existing money to the people who are first in line - ripping the value from the people's savings and handing it to them as cash in the hope they'll be fooled into spending it.