Friday, April 10, 2009

Stimulus

In this economic turmoil, the feds are putting together tax rebates to stimulate consumer spending. Much study is given to the question of how much of the tax rebate will be spent instead of going straight into personal savings. If the rebate recipients don't spend the extra money, the rebate is considered a failure.

A much-cited blog post by Susan Woodward and Bob Hall makes the obvious (in retrospect) observation that if the government really wants to stimulate spending, all we have to do is temporarily eliminate sales taxes (or provide any other type of "spending subsidy"). Consumers get to take advantage of the stimulus only if they choose to spend. This hits the wallet on the head, so to speak, and is 100% efficient in doing what we want a stimulus to do.

1 Comments:

Anonymous Anonymous said...

eliminate sales taxes? cute.

have you heard of the so called "Internets?"

4:29 PM  

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