Every year, the government collects about 650 Billion dollars through social security taxes. Let’s stimulate the economy in 2009 by not collecting that 650 Billion dollars. Neither employee or employer should pay in 2009. In return, the retirement age permanently goes up by one year.
Of course, the government has to borrow the 650 Billion, but the proposed stimulus package contains plans to borrow more than that.
I recognize that the one year delay in retirement needs to be graduated in some fashion, so that people close to retirement age are less effected. Let the wise men and women in Washington work out one of those compromises that if you’re born before 1950, it’s a 1 month delay, and so on and so on.
The social security tax is highly regressive, so this plan will help those that need help the most. Rich people will probably complain this plan doesn’t help them. Awww, everyone has to sacrifice somewhere. Someone just pointed out, social security is not a tax, it’s a contribution. Point noted, but not accepted.
It’s been argued that tax cuts don’t stimulate the economy. That people make the mistake of saving the cut or they foolishly pay down debt. That might be true in some Keynesian theoretical model, but for me, if we collectively agree to this proposal, then I promise to spend every dime of this temporary tax cut.
Unlike the proposed stimulus plan being kicked around in Washington, this plan immediately kicks in right now. No waiting years for plans to be drawn up and shovel ready contracts to be bid out.