The Stimulus Spending Alternative: 4 Tax Cut Options

More of this, less of that. Economists Brian Wesbury and Bob Stein make the case for something besides a mega-stimulus spending plan:

1) Why not eliminate corporate taxes all together? During FY2008, the US Treasury collected $304 billion in corporate taxes – elimination would cost roughly half of what the Obama stimulus plan may cost and just 30% of this year’s budget deficit. Imagine how the elimination of corporate taxes would change investor perceptions about investment, even for auto companies. 

2) Another option would be full (100%) expensing for any investment made by any company in 2009. This would encourage spending and investment. Individual income tax receipts were $1.15 trillion in FY2008. 

3) A 50% reduction in tax rates would cost less than the Treasury’s TARP proposal. Lower tax rates would take the sting out of any pay cuts unionized workers at auto companies might be forced to accept. 

4) Another option would be to allow all capital losses by individuals to be written off in full for 2008, rather than limiting them to just $3,000. This would limit the selling of profitable investments this year to absorb those losses for tax purposes only.