Put money into hands of people, businesses

By Steve Rathje

Rep. Dave Loebsack and the Nancy Pelosi Congress have failed us, which is why I have presented a simple economic proposal and analysis that demonstrates a credible approach to solve the problem our 2nd District faces.

l Tax holiday: I'm proposing an income tax, payroll tax and corporate tax holiday nationwide for 60 days. In other words, the government does not take any federal taxes out of your pay check for 60 days. This reflects an immediate

$416.7 billion stimulus impact to the economy and relief to everyone earning a paycheck.

The total loss in tax revenue to the government translates to around $47.7 billion, which is the difference between the cost of a tax holiday and the total stimulative impact. I estimate that the tax break on the corporate payroll tax match alone will enable corporations to create/save up to 2.6 million jobs averaging $50,000 per year.

In addition, consumers will have an average of $290 (tax free) per week in their paychecks to use as they see fit for 60 days. It's basically one-third of most Americans' paychecks. The people in the lower-income brackets who normally get hammered stand the most to gain.

l Income tax decrease: After the tax holiday, drop income taxes 25 percent to 30 percent.

The permanent, across-the-board decrease in income taxes will add $33 to the average weekly paycheck, or more than $132 per month. My proposal puts the money into the people's pockets and empowers them to save themselves.

l 15 percent corporate tax rates: The current U.S. corporate tax rate is 35 percent, the third highest in the world, which translates into annual tax revenue of $304 billion. This is crippling U.S. businesses and forcing them to do business overseas or in Mexico. Reduce that tax rate to 15 percent, which translates into $130 billion in annual corporate tax revenue. That puts $173 billion back into the corporations. Not all corporations will reinvest in themselves, but I believe that at least 97 percent will. That is $173 billion of instant corporate stimulus to invest in technology, machinery, brick and mortar and jobs.

According to Moodys, a permanent reduction in corporate income tax rates would provide a stimulative benefit to the economy of 30 cents for every dollar of tax reduction, or $52.1 billion, and much more after taking into consideration that people will spend it.

Therefore, the net cost to the government or loss of tax revenue would be $121.6 billion, which would be made up because of the potential creation of up to 3.5 million jobs averaging $50,000 per year in wages. Each new job has an annual tax benefit to the government of $15,000 in payroll and income taxes, which means every million new jobs puts $15 billion annually into government coffers, resulting in a pay down of the debt while actually growing the economy.

The best way to dig ourselves out of this mess is through hard work and personal responsibility. Capitalism does work - 5 percent of the world's population lives in the United States and creates 70 percent of the world's wealth. Our system works, and it has worked for more than 200 years.

Reduce the size of government, put the money and the power into the hands of the American people and we will work our way out of this. No more bailouts, TARP or TARP 2 or spending bills.

Steve Rathje of Cedar Rapids is a Republican candidate for Congress in the 2nd District. Comments: www.steve

rathje.com