Tax Rebate Logistics ... or Illogistics?
All the recent hubbub about the tax rebates has me completely flummoxed and recent reports by the Tax Foundation make me wonder how all this hand waving by Congress & the Executive is actually going help the economy. It's clear people who are making policy don't have to do any of the hard work to implement it.
What they've managed to cobble together in a matter of weeks will be a logistical nightmare and wont get into the economy for months.
It may be too late now, but if we're going to have a stimulus package I would be interested in hearing comments on alternatives to an income tax rebate. There are plenty of other taxes we pay besides income taxes.
Wouldn't a payroll tax holiday would be an easier solution?
No checks would have to go out from the treasury and the effect could be felt immediately by both businesses & employees. Employers would have lower payroll tax deposits and employees would get a larger paycheck. For instance, Congress could declare that from February 1st, no FICA/Medicare tax rates would be due on the first $8000 of wages. That would be equivalent to $612 savings per employee, for the employers and employee with each sharing in the stimulus.
Congress could increase unemployment benefits for the unemployed and bump up Social Security payments to help seniors. These checks are going out to recipients anyway and wouldn't require special handling by the treasury.
The only group I haven't been able to quite work out how to "stimulate" is the self-employed. Maybe an increase in the deduction for Self Employment Tax, or a slight decrease the net earnings from self-employment multiplier would reduce the SE tax for the year which would reduce their required estimated tax payments.
Accelerated depreciation could still be included as part of the package to stimulate investment.
It seems easier to help business and employees keep the money they already have than to have them send it to the gov't which then turns around and sends it right back. Very inefficient.