LOOKING FOR SOMETHING
YOU CAN DO PERSONALLY
TO HELP THE ECONOMY
IN A BIG WAY NOW?
Here is a new idea for dramatically helping to ease the current economic pain.
Before expounding on this “silver bullet” for helping fix the economy, you may appreciate a background review:
First, The Background:
If a tax payer sold a house, or stock or almost any capitol asset in 2008, he can only deduct the loss against any gains (which were few and far between in 2008). However, the IRS allows the taxpayer to deduct $3000 of the excess loss in 2008 and permits him to carry forward the leftover loss into future years for future deductions.
Now, The Idea:
For the tax year of 2008, alone, why not instruct the IRS to permit the taxpayer to deduct from income tax up to, say, 10 times the $3000 now allowed if his capital gain losses so entitle him to do so. He then, can carry the remainder over and the government can decide later on how much of the carry- over he can deduct, (and the government needs him to deduct) in 2009 or future years.
The Expected Results:
What people would do with the tax savings of up to $30,000 per person is conjecture. First, it would probably be used to reduce debt, which in its own way would stimulate spending in short order. Or, secondly, it might be used to increase savings which would stimulate future investments in perhaps, real estate, stocks and bonds or expansion of local businesses. Some of this would help stimulate employment.
The biggest virtue would be that it would be almost instant stimulation which the government urgently seeks. It would start with the initial announcement and be felt by the filing date of April 15 and certainly by the time people would receive a rebate from their funds deposited with the IRS in anticipation of higher tax payments in 2008.
The carry over would be beneficial also for 2009 because it would reduce the estimated payments and perhaps withholding because those payments only have to match or exceed by 10% the tax paid in 2008.
What Taxpayers Need To Do:
If you as a taxpayer and concerned American think that this idea has merit, I hope you will join me in increasing the visibility with people who can and will advocate the thought. I do not know why it has not been advanced before, or if it has, why it has not received more circulation and discussion.
One reason might be that it could be perceived as helping the rich. The exact opposite is the truth. It helps the poor and middle class more than the rich—a maximum $27,000 tax credit is of no substantial value to the very rich, but is of enormous value to someone who is forced to sell his home because he lost his job or had to pay big medical expenses. If he lost $50,000 on the sale of his home (which he bought for $250,000 and had to sell for distress at $200,000) the IRS would be benefiting him and the economy instantly a lot more than it is benefiting the rich. Also, by setting a ceiling on what can be deducted, the IRS is penalizing the rich because their losses have been in the hundreds of thousands and even in the millions, and a $30,000 ceiling against those numbers is a pittance.
Therefore, the argument that it favors the rich over the poor is without validity just by the mathematics alone.
What You Can Do:
Suggested actions include the obvious: communications to President Obama, Secretary of the Treasury Geither, your congressman and senators, letters to the editors, e-mails to friends with suggestions and anything else that comes to creative minds. Unfortunately, the idea is late in coming, so the urgency is twice what it ought to b
