Tax holiday bill picks up steam
'No other stimulus provision will be as immediate, effective'
Posted: December 14, 2008
10:51 pm Eastern
...Something similar to that plan was introduced in the House of Representatives last week by Rep. Louis Gohmert, R-Texas. The bill is HR 7309 that would require all federal income tax based on wages earned and FICA withholding to be left in paychecks for two straight months – dramatically increasing the amount each worker keeps.
Gohmert's plan would be paid for by the remaining $350 billion bailout spearheaded by Treasury Secretary Henry Paulson and already approved by Congress and signed by President Bush. Even wage earners who do not make enough to pay income tax would get back their FICA or Social Security withholding under the plan.
"In a matter of months, Paulson and Bernanke have committed $7.7 trillion to bailouts while individually Americans will pay $1.2 trillion in income taxes for all of 2008," Gohmert said. "We need to end the madness and implement a commonsense, free-market solution to our economic woes. My plan would cost less than the remainder of the bailout, but it would provide significantly more relief to taxpayers as well as a greater economic boost. Think about how much more of your paycheck you would see if you didn't pay federal taxes for January and February 2009."
Gohmert, who has already been backed in his plan by at least 35 members of Congress – all fellow Republicans – says he is getting interest from some Democratic colleagues as well.
"We've got a number of blue dog Democrats who are saying, 'Give me more information, this sounds like something I could really support,'" Gohmert said.
Gohmert said he doesn't care whether the bill comes to the floor under his name or a Democrat's, but that either way, it will require the American people to mobilize.
"I think the chance this has to get to the floor – even under a Democrat's name on the bill, fine by me – is if Americans rise up again, as they have a couple of times in the last two years, and let their voices be heard," Gohmert said.
Gohmert says the plan is actually much cheaper than the economic rescue effort pushed by Paulson and Federal Reserve Chairman Ben Bernanke. He says Paulson has roughly $350 billion left that "he's probably not going to spend. I see that about the same time I notice the $7.7 trillion is estimated to be what Paulson and Bernanke may be throwing at the economy to try and get it to do better and more credit extended – like people who are failing in their mortgage to refinance and be able to finance the part they're behind on."
According to Gohmert, all revenue the government is set to receive in 2008 totals $2.5 trillion. Of that, about $1.21 trillion is comprised of individual income tax money for the year 2008.
"And then you realize they're pledging, committing, buying, squandering six and a half times more than we're going to get in actual income tax for the year 2008," he said.
With that in mind, Gohmert's first idea was a tax holiday for all of 2008.
"If everybody got everything back – think about yourself – if you'd got everything back that you'd spent so far into the government, in individual income tax and didn't have to pay anymore for the rest of the year, do you think you'd have a merry Christmas?" he asked. "Can you imagine the economy this year if you had that kind of ... there'd be cars bought, auto dealers, auto manufacturers bailed out by all the cars being bought, homes, buildings being built. It would be fantastic."
But he didn't get much support for that admittedly radical idea. So he scaled it back to just two months.
Citing figures from former House Speaker Newt Gingrich's American Solutions think tank, he said Americans paid $101.6 billion per month in personal income tax and $65.6 billion per month in FICA tax. A two-month reprieve from these taxes would cost $334.4 billion, much less than the remaining $350 billion in bailout funds sought by Paulson. It would represent a 17 percent reduction in income taxes for Americans in 2009.
"These savings will allow some who are behind on their mortgages to catch up, others to trade their gas guzzlers for more efficient cars, pay off credit card debt, or take advantage of great deals in the stock market," explains Gohmert. "Our ailing industries would get the stimulus they need. Of course, I'd love to see long-term tax relief to individuals and a cut in corporate taxes to protect our businesses and American workers. However, I also know that those who control Congress and will soon control the White House will not allow that form of extended relief to be passed anytime soon. Therefore, as some of my colleagues and I deal with the political reality of the situation, we are trying to get done what we can with the circumstances we are given."
Gingrich has enthusiastically signed on to the Gomert plan, along with Grover Norquist of Americans for Tax Reform.
Gohmert is entering his third term in this upcoming 2009-10 Congress.
The NFIB said its November Small Business Economic Trends survey shows that small-business owners are feeling the impact of the current economic recession. Only a net-negative 4 percent of small business owners surveyed plan to create new jobs, and 50 percent reported profits falling. The net percent of all owners reporting higher sales in the past three months (seasonally adjusted) fell to a net-negative 25 percent, the worst reading in the 35-year survey history.
"No other stimulus provision will be as immediate and as effective as the payroll tax holiday in getting money in the hands of both employers and employees who are struggling to make ends meet in the current economic crisis," Danner said. "The payroll tax holiday will help small business owners afford the high costs of labor and will increase economic activity by allowing workers to take home more of their own paychecks. As lawmakers work to craft a stimulus package, NFIB urges Congress to remember how important small businesses are to our nation's economy and strongly recommends passing a six-month payroll tax holiday as part of any economic stimulus package."