Thursday, September 6, 2012

MY JUBILEE PROGRAM: Rx FOR ECONOMIC RECOVERY

I want to suggest a bold approach to addressing the economic and employment problems we’re facing now. As a Democrat and a supporter of President Obama, I would like to see this program implemented at once (for obvious political reasons, I admit), although benefits would not start kicking in until next year. However, this would be a win-win program; it would offer something for just about every American employer, employee, and consumer, so I can't imagine why there would be opposition to it from any quarter, Democratic, Republican, or whatever.

FELLOW LIBERALS, PLEASE NOTE: This is a 7-Step program, and Step 1 is the most startling and controversial step. Please do not cast this whole thing aside as soon as you read what’s proposed in Step 1. By Step 3, you’ll see that #1 was not the foolhardy proposal that it may have seemed to be at first reading. Here’s my proposal:

1)  Declare a 1-year moratorium on collection of FICA (federal payroll) taxes for all employers and employees. This will, in effect, give every employer a tax break equal to 7.65% of payroll, and every employee a 7.65% “raise,” thus providing the "jolt" that our economy needs right now.

2)   After the first year, start phasing the tax back in, as follows: Increase the tax by 2% each year (each, for employer and employee) for 4 years, while also raising the social security limit (the amount of gross annual income against which the tax is levied) by $50,000 each year.

3)  After four years, abolish the social security limit altogether, so FICA taxes are collected on all earned income (remember, it’s only 15.10% of annual income up to $113,700 now; under my proposal, after 4 years, it’ll be 16% of all earned income).

4)  Somehow give strong incentive for people to invest additional funds on their own toward their retirement.

5)    For five years, give a tax deduction for 100% of the interest paid on purchases of any big-ticket item manufactured in the U.S.

6)  Beginning in year 6 of the interest deduction, reduce this deduction (except for the home mortgage interest deduction) by 10% per year until it disappears, leaving only the home mortgage interest deduction intact.

7)  Somehow penalize companies which outsource jobs to other countries, and reward those which insource them.

Since I am not an economist, I don't know; maybe this wouldn't work. So, I welcome feedback from anyone who can show me why this would not be a win-win program for everyone.

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