I mentioned this is a comment on Jeff Kessler's blog yesterday. And I thought, hmmm, this topic could stimulate some interesting disscussion.
If Mr. Bush or his advisors had asked me, I would have said that instead of this crazy idea of sending everyone in the country a check for a few hundred dollars ... instead of that .... how about
1. Reinstate the personal interest deduction
2. Place a national cap on credit card interest rates
Up until Regan's tax reform of 1986, interest paid on credit cards was deductible. When I first wrote the comment yesterday, I was thinking that we lost the personal interest deduction in the 1970s under Carter; not the 1980s under Regan. But here it is, right on the U S Treasury web site. Ronald Regan's Tax Reform of 1986.
The official line was that removing the personal interest deduction would stimulate savings. Hello? Has the U. S. individual saving rate improved since 1986? And WTF anyway? Mr. Bush is telling us that spending is what this country needs right now.
And think about this: The non-deductability of credit card interest was a factor for many people in deciding to re-finance their homes or take out HELOCs. And in the process they burdened a long term asset (their home) with debt for short term items (After all, credit cards are often used to pay for food, clothing, gasoline ... all stuff that is rapidly consumed in the short term.)
What did happen in 1978 was a Supreme Court ruling: Minneapolis v. First of Omaha Service Corp., that stated national banks actually could export interest rates across state lines. That's why big banks opened offices in states such as Delaware and South Dakota, which have no ceiling on interest rates. Now you know why your VISA bill has a Delaware address. Here's more.
Interesting article from 2002 I came across while researching.....
Just my 2 cents worth..... put it on my AMEX. :-)
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