Friday, February 06, 2009

The #TCOT Plan : Cut All Personal and Corporate Income Taxes in Half Immediately for 12 months of 2009

Both the Congressional Budget Office and the Heritage Foundation have recently documented how ineffective President Obama's proposed $900 billion and growing "Porkulus" political spoils spending bill will be at improving the economy. In a column today, Charles Krauthammer provided the "coup de grace" by decimating the fear promoting "urgency for pork now" arguments of the President.



As co-founder of Top Conservatives on Twitter, I am today proposing "The #TCOT Plan" as a far superior plan that will immediately revive the economy. I am laying out the key component of the plan here, and am asking members of #TCOT to provide their input on additional components of the plan in comments here on this blog and at The TCOT Report.

The plan is simple:

1. Immediately cut all personal and corporate income taxes in half for all 12 months of 2009.

This plan could be implemented immediately as follows:

1. All employers would be instructed to immediately cut the amount of Federal Income Tax withholdings in half, beginning in next pay cycle beginning March 1.
2. Corporations that pay income taxes quarterly would pay half their corporate taxes in their next quarterly filing, for the period ending March 31.

Lost revenue over the 2009 Calendar year would be approximately $800 billion (A full $900 billion less than the current version of PORKULUS floating through the Senate). This is based on 2007 Federal personal income tax receipts of approximately 1.2 trillion, and Corporate income tax receipts of approximately $345 billion.

The estimated $1.6 trillion of personal and corporate income tax receipts for 2009 under this plan would, on initial review, be cut to $800 billion. However, given the economic stimulative effect that tax reductions would have on the economy (as the famous Laffer Curve demonstrated), actual receipts under this plan would probably exceed $800 billion, though by how much we'll leave for Dr. Laffer and his colleagues to calculate.



Assuming about $3 trillion in actual Federal spending for 2009, set against about $2.7 trillion in projected receipts, we could anticipate the federal deficit under this plan would increase from about $300 billion to something less than $1.1 trillion.

The questions for #TCOT members to comment on are as follows:

1. How would you use the extra cash you received under this plan during 2009, and would it, in your opinion, improve the economy more than PORKULUS ?

2. What would be the best way to deal with the increased federal deficit envisioned under this plan ?

a. Cut spending across the board
b. Borrow the difference, just as President Obama would have us do with PORKULUS
c. Cut spending some, and borrow some

Please comment here directly. All comments will be posted in the comment section at The TCOT Report

I would also ask that you send a link with this plan to every Economist, Radio Talk Show Host, and member of Congress you know, and ask them the same, simple question:

Which plan will help the economy more ?

1. Porkulus



or

2. The #TCOT Plan

21 comments:

bmo said...

Great Idea! Agree, this is what I call "Stimulus Ready", No Shovels Required!

ksondere said...

Great ideas. I would also suggest that some tax cuts be coupled with corporate reforms.

http://utopiosis.blogspot.com

Steve said...

Between this and immediate cessation of capital gains taxes, the economy would be red-hot inside a month. Politicians are too consumed with politics to see they are on the verge of destroying this country. This plan would do what the "Stimulus' bill never could: Revive the economy in short order.

jeanmciver said...

Finally someone gets it! Use common sense -- Psst, Senators, that's a new phrase!-- and quit trying to fix the economy by pouring money America doesn't have down an abyss. Tax cuts for U.S. citizen taxpayers -- another term some on the left side of the aisle may not recognize -- would be a good start.

Anonymous said...

The questions for #TCOT members to comment on are as follows:

1. How would you use the extra cash you received under this plan during 2009, and would it, in your opinion, improve the economy more than PORKULUS ?

1) Eliminate small amount of non-mortgage debt, then would probably buy new Ford Flex; invest in low risk short term funds for son’s college in 5 years from now; additional savings and investment via dollar cost averaging; possibly take second traditional mortgage for 2nd home/future retirement home.
2) My small business (professional services corporation) would like hire a new associate (physician) . Our medical center would likely lift hiring freeze, raise health care worker salaries, accelerate $100M/5 yr capital plan.
3) The owner of our for-profit hospital system would likely lift hiring freezes, increase pay, improve facilities in the system that now employs 90,000 people.


2. What would be the best way to deal with the increased federal deficit envisioned under this plan ?
a. Cut spending across the board

Vann in Spokane, WA said...

The questions for #TCOT members to comment on are as follows:

1. How would you use the extra cash you received under this plan during 2009, and would it, in your opinion, improve the economy more than PORKULUS ?

1) Eliminate small amount of non-mortgage debt, then would probably buy new Ford Flex; invest in low risk short term funds for son’s college in 5 years from now; additional savings and investment via dollar cost averaging; possibly take second traditional mortgage for 2nd home/future retirement home.
2) My small business (professional services corporation) would like hire a new associate (physician) . Our medical center would likely lift hiring freeze, raise health care worker salaries, accelerate $100M/5 yr capital plan.
3) The owner of our for-profit hospital system would likely lift hiring freezes, increase pay, improve facilities in the system that now employs 90,000 people.


2. What would be the best way to deal with the increased federal deficit envisioned under this plan ?
a. Cut spending across the board

Vann in Spokane said...

PS TCOT Plan!!

S.D. in Fly Over Country said...

1) Our family would use the extra money from the reduced with holdings to help pay for our oldest child's college tuition and to do some projects around our house including installing a fireplace in our living room and finishing the kitchenette / bar in our rec. room

There is no doubt this plan would improve the economy beyond measure. People, including my husband and I, are holding onto our money because of the level of uncertainty being created in this current atmosphere. Because it appears the Democratically controlled Congress & White House plan to push through all kinds of programs and regulations that will hurt the economy and not help it AND we're printing and borrowing money like there is literally no tomorrow, we're afraid our dollar will be so devalued we will have to make some serious cuts. We're concerned about a looming threat to our totally reliable health insurance if there is a push for Universal Healthcare, and finally we are expecting a serious cut in our income because there is no pledge to make those tax cuts from 2003 permanent. We will jump to 28%.
More than anything, the uncertainty is freezing this economy.

2. In order to pay for the proposed plan and deal with our already crushing debt, we need to cut spending ACROSS THE BOARD!

The Federal government is far too large, intrusive, and bloated. That is a relevant question, despite what we've been told.

In addition to the TCOT plan proposed I must add that tax cuts and spending cuts across the board are not enough.
If government regulation of the private sector is not examined in a serious way and reformed, underlying problems that stifle growth will continue to plague us.
In some areas, there is far too much regulation - i.e. energy exploration and extraction and one of the primary causes of the current "crisis", mortgage lending.
In other areas, there is not the right kind of regulation - SEC.

BrickandClick said...

I love this idea, and am convinced it would work. And that's why it'll never pass. Because it it were passed, it would prove that the Laffer Curve championed by conservatives is the real deal, and it would deal a blow to the tax and spend belief system embraced by the left.

If this were actually enacted, Wall Street would explode. You'd see the Dow jump 10 percent in one day.

Carolyn said...

1. How would you use the extra cash you received under this plan during 2009, and would it, in your opinion, improve the economy more than PORKULUS?

With the additional $7200 I would accrue from halving my federal withholding, I would make a single additional principal payment on my mortgage which would offset the loss of equity that I have suffered in the past year and this would allow me to be able to refinance at a lower interest rate, thus saving me more money on my monthly payment and putting more money in my pocket that I would spend.



2. What would be the best way to deal with the increased federal deficit envisioned under this plan ?

a. Cut spending across the board

CJ said...

Was on the call and think this is a great idea!

1) To be honest, any tax cut would go right into savings since I was just laid off 2 weeks ago. That said, if a job came around in the near term, it would probably be spent on home repairs and vacation travel that is currently being canceled.

2) A combination of reduced gov't spending and increased debt would be optimal. The key would be to make sure the budget cuts did not offset any of the economic good being done by the tax cuts.

Without a doubt, however, business tax cuts would be the best way to get things going again.

BTW, I will get almost nothing under Porkulus.

Anonymous said...

I don't get it. Can you explain more detail about the gov't spending and the deficit? It's too confusing.

Bill Smith said...

TCOT Plan is right on!

Questions:
1) How would you use the extra cash you received under this plan during 2009, and would it, in your opinion, improve the economy more than PORKULUS ? I would plow it back into the economy via purchases of good and services which sustaine real jobs.

2) What would be the best way to deal with the increased federal deficit envisioned under this plan?

a. Cut spending across the board
b. Borrow the difference, just as President Obama would have us do with PORKULUS
c. Cut spending some, and borrow some

The federal deficit would not expand if the government ceased this wasteful PORKULUS bill. Immediately, except for National Defense, obligations to military and federal retirees, and potential for continued work in the highway infrastructural )not bridges to nowhere), the Government should go on a massive diet and cut spending.

All grants to ACORN, Planned Parenthood, and other such agencies should cease immediately. Department staffs (Educ., HEW, etc. should be cut by 25%). It would help greatly, if these huge omnibus type bills stopped immediately and all proposed funding of projects, grants, etc. were required to be made public for a minimum of 60 days for public comment.

Brad Ginn said...

I would love to see it happen but if they did that, the taxes would never go back up because there would be an outcry. Tell the Congress to pass the FAIRTAX, which is already a proposed bill!!

Dan Mosqueda said...

Michael,

This actually is a solid idea, but I can guaranty it will never happen. This had to happen under President Bush. I'm not saying this is a waste of time to put the idea out there, in fact it is a great idea. I imagine it will have to be considered when the spending bill fails to change anything.

I'm not thrilled about the "Porkulous" label, though I agree this bill is about spending, and wish the spending were 50% on infrastructure and 50% on cutting taxes, but by stooping to the level of "name-calling" TCOT weakens its stance and puts itself on the "fringe" and kills any opportunity as seeming thoughtful or serious. It seems mean-spirited and gimmicky.

It's a shame because your idea is terrific and would actually work beyond anyone's expectations I would imagine.

So, if it happened:

I would continue on the road to being debt-free. I would buy an American made bicycle (a Trek Madone at about $3k) and I'd keep investing in Ford shares directly. I'd probably up my 401K investing also.

I already plan on a big trip to Disney this summer with my kids, that's pretty stimulative!

Dawn said...

This plan would insure that I could keep my daughter in college at a full time status.
My family could pay down debt and even save some money!

Kevin said...

!. I'd pay down some debt, save more money, and probably buy a new TV.

2. Cut spending across the board.

The business tax cuts are the best idea. Business tax is too high!

Michele Kelly said...

right behind you! PELOSI'S PORK PROJECT COULD USE THE SAME AMOUNT OF LIPOSUCTION SHE GAVE HER FACE!

Daniel said...

I love the TCOT plan. It really makes sence. Our law makers think we are too stupid to handle our own finances. I say the law makers give up their salary after they leave office, & put them on social security. Maybe then Social Secutity would get fixed. Security details should not be given to our past Presidents either.

Anonymous said...

But I thought the Laffer curve was a failure? I went to school with his kids and stayed in touch with him afterward and Art told me that he had given up on it later in life. But I haven't spoken to him in about five years. Do you know more about this?

Egy Azziera said...

First off we would like to congratulate you on your fine public speaking skills. It looks like those who said the Obama Administration would strike while the iron is hot may have been correct, and the Administration may be doing it in a way that does not require them to even get a vote in Congress.