Dan Posted February 5, 2009 Share Posted February 5, 2009 I keep seeing people talk about tax cuts, more tax cuts. We need tax cuts to put more money in people's pockets so they'll start spending. Now a tax incentive to buy a new car. Here's my concerns, that I haven't really seen addressed: If I don't have a job, how's a tax cut or tax incentive going to get me spending money when I have none coming in? How can I buy a car when no one is giving me a loan to buy the car (or house)? Yes it seems a tax cut should or could be part of a stimulus plan, but it seems like it should be a smaller portion of the plan. It seems like job creation should be the focus; then once everyone has a job, we could worry about cutting their taxes. What am I missing? Link to comment Share on other sites More sharing options...
VABills Posted February 5, 2009 Share Posted February 5, 2009 A very small portion of society doesn't have a job. When you can stimulate the other 92% to spend more, then industry has to increase to keep up with the demand. Link to comment Share on other sites More sharing options...
/dev/null Posted February 5, 2009 Share Posted February 5, 2009 The idea is that more money in the hands of consumers means the consumer has more money to spend The consumer will go to BigBuyCityMart® to buy more Manufactured Widgets® BigBuyCityMart® will hire new employees to staff their stores to keep up with the increased demand for ManufacturedWidgets® Widgetron®(a subsidiary of FacelessMegacorp®) will hire new employees to keep up with BigBuyCityMart's® increased demand for ManufacturedWidgets® ManufacturedWidgets® are the finished product of plugging a gadget into a gizmo and connecting to a thingamajig. Widgetron®(a subsidiary of FacelessMegacorp®) has a contract with SmallBusinessCo® to provide Gadgets, MediumSizeBusinessInc® to provide Gizmos, and Mom&PopLLC® to provide Thingamajigs. To increase production of ManufacturedWidgets®, Widgetron®(a subsidiary of FacelessMegacorp®) will need to increase the number gadgets, gizmos, and thingamajigs they order. SmallBusinessCo®, MediumSizeBusinessInc®, and Mom&PopLLC® will hire new employees to meet the demands of Widgetron®(a subsidiary of FacelessMegacorp®) to produce more ManufacturedWidgets Meanwhile the new employees hired by BigBuyCityMart®, Widgetron®(a subsidiary of FacelessMegacorp®), SmallBusinessCo®, MediumSizeBusinessInc®, and Mom&PopLLC® now have money in their pocket and can become consumers of various other products... Link to comment Share on other sites More sharing options...
PastaJoe Posted February 5, 2009 Share Posted February 5, 2009 I keep seeing people talk about tax cuts, more tax cuts. We need tax cuts to put more money in people's pockets so they'll start spending. Now a tax incentive to buy a new car. Here's my concerns, that I haven't really seen addressed: If I don't have a job, how's a tax cut or tax incentive going to get me spending money when I have none coming in? How can I buy a car when no one is giving me a loan to buy the car (or house)? Yes it seems a tax cut should or could be part of a stimulus plan, but it seems like it should be a smaller portion of the plan. It seems like job creation should be the focus; then once everyone has a job, we could worry about cutting their taxes. What am I missing? You're not missing anything, tax cuts are not stimulative in a situation where people have lost, are going to lose, or are afraid of losing their jobs. Working poor or middle class use the money to either pay off existing bills or save it for when they really need it in case they lose their job. And the wealthy are under no obligation to invest the tax cuts in the U.S., and will not significantly increase purchases over what they already spend. So the only alternative is for the gov't to spend domestically, which maintains or creates jobs, which increases consumer confidence, which then stimulates increased consumption. Link to comment Share on other sites More sharing options...
Dan Posted February 5, 2009 Author Share Posted February 5, 2009 The idea is that more money in the hands of consumers means the consumer has more money to spend The consumer will go to BigBuyCityMart® to buy more Manufactured Widgets® BigBuyCityMart® will hire new employees to staff their stores to keep up with the increased demand for ManufacturedWidgets® Widgetron®(a subsidiary of FacelessMegacorp®) will hire new employees to keep up with BigBuyCityMart's® increased demand for ManufacturedWidgets® ManufacturedWidgets® are the finished product of plugging a gadget into a gizmo and connecting to a thingamajig. Widgetron®(a subsidiary of FacelessMegacorp®) has a contract with SmallBusinessCo® to provide Gadgets, MediumSizeBusinessInc® to provide Gizmos, and Mom&PopLLC® to provide Thingamajigs. To increase production of ManufacturedWidgets®, Widgetron®(a subsidiary of FacelessMegacorp®) will need to increase the number gadgets, gizmos, and thingamajigs they order. SmallBusinessCo®, MediumSizeBusinessInc®, and Mom&PopLLC® will hire new employees to meet the demands of Widgetron®(a subsidiary of FacelessMegacorp®) to produce more ManufacturedWidgets Meanwhile the new employees hired by BigBuyCityMart®, Widgetron®(a subsidiary of FacelessMegacorp®), SmallBusinessCo®, MediumSizeBusinessInc®, and Mom&PopLLC® now have money in their pocket and can become consumers of various other products... A most excellent post! The problem I have with the scenario is... I have a job, in fact I'm about to get a decent bonus, but no way am I spending it now. I was going to buy the wife a new car. But, with confidence things will be better anytime soon, I'm going to save that money for the time being. So fundamentally, the scenario is sound, but how do we get th 92% spending again if they think they're on the verge of joining the 8% not working? Link to comment Share on other sites More sharing options...
finknottle Posted February 5, 2009 Share Posted February 5, 2009 You're not missing anything, tax cuts are not stimulative in a situation where people have lost, are going to lose, or are afraid of losing their jobs. Working poor or middle class use the money to either pay off existing bills or save it for when they really need it in case they lose their job. And the wealthy are under no obligation to invest the tax cuts in the U.S., and will not significantly increase purchases over what they already spend. So the only alternative is for the gov't to spend domestically, which maintains or creates jobs, which increases consumer confidence, which then stimulates increased consumption. And how exactly does the government extending the hours of a family planning clinic or refurbishing restrooms in Yellowstone help somebody who has lost, is going to lose, or is afraid of losing his job? Link to comment Share on other sites More sharing options...
/dev/null Posted February 5, 2009 Share Posted February 5, 2009 The problem I have with the scenario is... I have a job, in fact I'm about to get a decent bonus, but no way am I spending it now. I was going to buy the wife a new car. But, with confidence things will be better anytime soon, I'm going to save that money for the time being. So fundamentally, the scenario is sound, but how do we get th 92% spending again if they think they're on the verge of joining the 8% not working? Actually 2 problems with the scenario as I was only providing the idea behind tax cut The first problem is the one you mentioned. People aren't spending they are saving now The second problem is part of the reason we're in the mess we're in now. Widgetron®(a subsidiary of FacelessMegacorp®) moved their manufacturing facility to Siam, MediumSizeBusinessInc® to Persia, and SmallBusinessCo® imports most of their raw materials from The Holy Roman Empire, meaning a lot of the new jobs created are outside the US Link to comment Share on other sites More sharing options...
PastaJoe Posted February 5, 2009 Share Posted February 5, 2009 And how exactly does the government extending the hours of a family planning clinic or refurbishing restrooms in Yellowstone help somebody who has lost, is going to lose, or is afraid of losing his job? Somebody has to do the jobs, extended hours means either more staff or overtime for existing staff, and you need construction/plumbing/carpentry type workers to redo the restrooms. You're either insuring the current providers of the services stay employed, or are hiring new workers for the increased workload. Link to comment Share on other sites More sharing options...
pBills Posted February 5, 2009 Share Posted February 5, 2009 A very small portion of society doesn't have a job. When you can stimulate the other 92% to spend more, then industry has to increase to keep up with the demand. Yes, percentage wise a small portion does not have a job. However, I think there need to be a push to create or get some projects going in order to get people back to work. When people feel more secure with their job they will/should spend. Link to comment Share on other sites More sharing options...
finknottle Posted February 5, 2009 Share Posted February 5, 2009 Somebody has to do the jobs, extended hours means either more staff or overtime for existing staff, and you need construction/plumbing/carpentry type workers to redo the restrooms. You're either insuring the current providers of the services stay employed, or are hiring new workers for the increased workload. That is about as much help to our hypothetical worker as saying tax cuts means somebody is more likely to open up a restuarant, needing staff, construction work, etc. Link to comment Share on other sites More sharing options...
YellowLinesandArmadillos Posted February 5, 2009 Share Posted February 5, 2009 A very small portion of society doesn't have a job. When you can stimulate the other 92% to spend more, then industry has to increase to keep up with the demand. Wrong... There is so much debt people are carrying, only 20% of the last tax rebate went into spending. That is no more stimulating then the TARP. Unless it is a tax credit v. a tax cut it shouldn't be considered stimulating the economy. Project spending is stimulating, it causes spending. The Republican's have it wrong... tax cuts won't do much good for the economy when everyone is scared to spend... and are at risk to losing their jobs. We are looking at 10% unemployment by the end of the year according to some economist talking heads on CNBC and CNN this morning. That can't be good, especially considering the exponential growth in the labor force since the early 1980s. Link to comment Share on other sites More sharing options...
Cheeseburger_in_paradise Posted February 5, 2009 Share Posted February 5, 2009 I keep seeing people talk about tax cuts, more tax cuts. We need tax cuts to put more money in people's pockets so they'll start spending. Now a tax incentive to buy a new car. Here's my concerns, that I haven't really seen addressed: If I don't have a job, how's a tax cut or tax incentive going to get me spending money when I have none coming in? How can I buy a car when no one is giving me a loan to buy the car (or house)? Yes it seems a tax cut should or could be part of a stimulus plan, but it seems like it should be a smaller portion of the plan. It seems like job creation should be the focus; then once everyone has a job, we could worry about cutting their taxes. What am I missing? Without knowing for sure what's in the current plan, I'm guessing the tax cuts include cuts that will also help small businesses, not just giant widget makers. Big business is great, but small businesses have been the backbone of this country for a while, even after the success of the Walmarts. Small business owners employ more than half of us. And they are fearsome entrepreneurs. Tax cuts worked when Kennedy employed them, when Reagan employed them, and even when George W employed them. But to make it work, we still need hope... Link to comment Share on other sites More sharing options...
finknottle Posted February 5, 2009 Share Posted February 5, 2009 The Republican's have it wrong... tax cuts won't do much good for the economy when everyone is scared to spend... and are at risk to losing their jobs. We are looking at 10% unemployment by the end of the year according to some economist talking heads on CNBC and CNN this morning. That can't be good, especially considering the exponential growth in the labor force illegal immigration since the early 1980s. fixed. Link to comment Share on other sites More sharing options...
YellowLinesandArmadillos Posted February 5, 2009 Share Posted February 5, 2009 And how exactly does the government extending the hours of a family planning clinic or refurbishing restrooms in Yellowstone help somebody who has lost, is going to lose, or is afraid of losing his job? Agreed there is a small proportion of pork in the Bill, less than 1% and it is stupid to open up yourself politically to the ideological issue in an economic deal. That being said, refurbishing restrooms is stimulative.... It takes someone to do the work and that means a job and a salary for someone in the construction industry, one of the hardest hit of all sectors. Go ask Joe the Plumber. Link to comment Share on other sites More sharing options...
erynthered Posted February 5, 2009 Share Posted February 5, 2009 Yes, percentage wise a small portion does not have a job. However, I think there need to be a push to create or get some projects going in order to get people back to work. When people feel more secure with their job they will/should spend. They're now taking applcations for cleaning "Johnny on the spot" locations at Yellowstone National Park. Sign up , man!! I hear its union work. Link to comment Share on other sites More sharing options...
YellowLinesandArmadillos Posted February 5, 2009 Share Posted February 5, 2009 fixed. LOL, not the only reason, but one of them... The other is exponential increase in women in the labor force too and population growth through legal immigration. P.S. In this economy, a lot of the illegals are going back to wence the came. http://www.opednews.com/articles/Illegal-i...080908-158.html http://www.catholic.org/international/inte...ry.php?id=31100 Link to comment Share on other sites More sharing options...
finknottle Posted February 5, 2009 Share Posted February 5, 2009 Agreed there is a small proportion of pork in the Bill, less than 1%... You can keep repeating the taking point or put up some math. What are the areas you say are pork and what is stimulative spending? Link to comment Share on other sites More sharing options...
YellowLinesandArmadillos Posted February 5, 2009 Share Posted February 5, 2009 Link to Senate Finance Committee Bill http://www.finance.senate.gov/sitepages/le...tment%20Act.pdf Link to comment Share on other sites More sharing options...
YellowLinesandArmadillos Posted February 5, 2009 Share Posted February 5, 2009 Anything that creates a job or requires spending on a project for purpose for the public good should be considered stimulative. Also, the President's requirement on salary requirements on the TARP have to be considered a plus too. It means that the money can be used to short a bank or financial institutions balance sheet or preserve a dividend payout to stock holders which I would assume is stimulative. Link to comment Share on other sites More sharing options...
finknottle Posted February 5, 2009 Share Posted February 5, 2009 Anything that creates a job or requires spending on a project for purpose for the public good should be considered stimulative. Also, the President's requirement on salary requirements on the TARP have to be considered a plus too. It means that the money can be used to short a bank or financial institutions balance sheet or preserve a dividend payout to stock holders which I would assume is stimulative. So what are the stimulative parts in your opinion, when is their impact felt, and what do they add up to? Link to comment Share on other sites More sharing options...
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