Monday, August 27, 2012

Real Wealth Redistribution

I am writing this because I sent a somewhat cheeky email about a Father and Daughter (Dem v. Rep), and I got ONE irate response saying I was a propagandist! I was totally insulted, not because he thought I was a propagandist, but because if I was using propaganda, it would have been so much better than that email.

Anyway, it did get me thinking about the morass this country is in, and why we are so far apart concerning the budget, taxes, and pretty much everything. So, being an engineer and a bridge builder (yes I love it when everyone agrees with me!!!), I thought about a solution that I think both sides of the political spectrum could agree on.

If you really want to have a true redistribution of the wealth, then one thing needs to happen: wealthy, rich people need to go out and spend it on people trying to make a living locally, not charity..but prosperity…ooh, new slogan..…or invest it in companies…or whatever. Hording money is never a good thing, so how can we loosen those purse strings? One idea would be for a tax break for “investing” in every local company or establishment you “invested” in. Of course, there would be some exceptions, but say someone bought a dress, jewelry something from a variety of Austin companies (where they live)…and it totaled $100,000..then they could get a 10% reduction on their taxes, or $10,000 reduction in tax payments.

Some constraints would include that it would have to be over $100,000 invested in the next 6 months, will need to be with local merchants (car, boat and big ticket dealers included) and the deduction could be carried forwarded for 3 years. BOTH sides could NOT argue with a solution like this? A virtual tax “rebate” for the “wealthy” and a local stimulus package rolled up in one sweet package. The “job creators” would ACTUALLY be creating jobs and the social architects would see lower unemployment, more tax revenues from incomes and sales, and the “intangible paw of despair” will be lifted immediately.

So let’s do the math…say $100 Billion was pumped into the economy over the next 6 months. The impact would be like $250 billion was distributed, sales taxes would rise, income taxes would increase (more jobs, more money), etc. And the cost: $10 Billion in taxes not collected…but you would get $20 to $30 billion in new taxes. I know if I could double or triple my money, I would do that EVERYDAY!

Implementation would be super simple. The Executive Office could mandate an Order, the IRS could generate a “Form SP’ that would indicate that ‘x’ number of dollars were spent for such and such.

The effects would be felt immediately…as each dollar in the community usually gets “turned” about 2.5 times a month.

But here is the rub. Which Party will bite? This could be the differentiator in the coming election…because you cannot argue against it. This is TRUE social welfare where EVERYONE wins…my kind of solution. Let’s pray they are not all cowards in Congress.

Jeffrey Fry

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