Guest post by Ted Koch:
I have a simple solution to our current economic problem which in addition to providing stimulus money which we all know has worked in the past to create spending and thus jobs, also reduces taxes. The beauty of the idea is that it does not require any government money in the short term and after all it is the short term we are most interested in. However, since it effectively reduces the tax burden on the middle class and not the wealthy I predict it will not meet with much approval by main stream Republicans. Hopefully, the Tea Partiers will see it for what it is worth and not be blinded and bullied by the Koch brothers and their wealthy friends into believing otherwise.
Basically the middle class and especially retirees have a lot of money tied up in IRA type investments that if they were to cash in on now they would have to pay taxes as if it was ordinary income. This high tax rate keeps them from cashing in now. Pass a law allowing for any withdrawals made in the next few years to be taxed at the capital gains rate or less. This would put the middle class on a more equitable basis with the wealthy investor class. Money would flow into the economy and even some taxes would be paid. Otherwise the money would just sit in these IRA accounts until later. Allowing even younger workers to take similar withdrawals would put money into the system. It would take it out of the hands of the Wall Street investment houses, but who cares. They already got more than their share.
Some people are currently withdrawing and they might withdraw more. The IRS would get a smaller tax bite from them and would receive less in the long term, but it is the short term we care about.
It all makes sense to me, but that’s probably a negative for Congress. It’s just too simple.
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Ted Koch is a retiree on the west coast.
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This guest post was submitted in response to my query about how the best way to deal with the current economic situation. This post does not necessarily reflect my thoughts and feelings.
Your comments and reactions are, of course, appreciated. Just play nice. I have standards. And I don’t want to have to delete you.
