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Paul Ruth

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Use the tax deductions system to spur economic groth, and this is not just another tax cut idea.

I would like to share an idea I had to one, help resort the government budget, and two, to increase economic activity. I have entitled my idea The Non-Profit Employment Incentive: It is outlined in brief below.

The basic concept is for profit businesses large to small, to help employ people who they may lay off, or those who need a job through non-profits. The system would work just like the donation program for tax deductions and so on, only these donations would go specifically to employ people at non-profits. So if company A donates $1 million to a non-profit to hire 20 people for a year, then they would get a tax deduction, and/or reduce liability, and so on.

The two major benefits to this program would be increased employment and economic stability, and increases tax revenue without having to raise taxes. When someone is employed that salary is spent 5 to 7 times in the economy, which also means that tax revenue would be 5 to 7 greater for that money. This should spur economic growth, and make downturns less painful in the future.

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    Mar 28 2011: In the early 2000's we gave companies as much freedom and money as they have ever had in 100 years. If allowing companies to have this much money spuuly and control this much wealth, then somebody please explain the crash of the whole system in 2008.

    Maybe reading the official report might help clear some minds: http://www.fcic.gov/
    • Mar 28 2011: Paul: You started this discussion with the idea of using the tax system in an innovative way, but you have migrated to a strong focus specifically on poor people, with your various remarks about "progressive" and "regressive" taxes and their effects on the poor. I suggest there are better ways of alleviating poverty than what you propose, but that would be the subject of a whole new discussion.
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        Mar 28 2011: The I would like to hear them!!! Becasue so far, many things have not worked.
    • Mar 28 2011: The crash of 2008 is very simple to explain. Way back in Jimmy Carter's day, some "progressive" types proposed that if more low income people could be helped to own their own homes, they would join the middle classes as their homes appreciated in value. Policies were implemented to enable this, mainly in the form of government guarantees of mortgages through Fannie Mae and Freddy Mac. Subsequent presidents continued with the process, and inevitably what followed was a bubble in home prices. More and more poor people were enticed into mortgages they really couldn't afford by being offered specially low initial rates. Banks could do this because the government backed their mortgages, so there was no risk. As the poor bought their own homes, others moved up into bigger homes, and so on up the chain. More and more people buying houses pushed the price of houses up and up and up. Even those who didn't move up to a bigger house borrowed against the increasing equity in their existing house. At the same time, interest rates have been kept artificially low for years. Companies with cash looked for places to invest that cash that would return more than just a couple of percent. So some clever financial types started buying shaky mortgages from the banks that held them, bundling them with credit card debt and unsecured lines of credit, and sold them to companies as AAA-grade investments. Then the inevitable happened: Joe Sixpack could no longer pay his mortgage when it came up for renewal, nor could tens of thousands more like him. Pop. House prices collapsed, the so-called AAA-grade 'paper' proved worthless, everybody and his brother started defaulting on everything, and down came the house of cards.

      Message: While putting poor people in their own homes may be a worthy goal on the surface, every social policy has unintended consequences. The "greedy" bankers were only partly to blame. None of this could have happened without interference in the system.
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        Mar 28 2011: Did you read the report??

        The previous ideas of puttin gpeopl ein home was correct with bank failures in the early 1990's. It does not explain 2008. Which is why the government needs to find ways to control companies. This means through taxation and regulation. A flat tax only help the wealthy continue to support the wealthy.
        • Mar 29 2011: Here is what the report says:

          "There was an explosion in risky subprime lending and securitization, an unsustainable rise in housing prices, widespread reports of egregious and predatory lending practices, dramatic increases in household mortgage debt, and exponential growth in financial firms’ trading activities, unregulated derivatives, and short-term 'repo' lending markets, among many other red
          flags."

          It follows that with:

          "... the Federal Reserve’s pivotal failure to stem the flow of toxic mortgages, which it could have done by setting prudent mortgage-lending standards."

          Which is pretty much what I said. It seems you are blind to any truth other than that which fits your preconceived ideas of social fairness.

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