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Another round of incentives needed to stimulate economy!

By
Real Estate Broker/Owner with Carousel Realty of Dyer County Tn 248435000

Here in my small city of Dyersburg,Tennessee we have several manufacturing plants with some of them tied to the auto industry.

On Friday two of the plants made an announcement of layoffs beginning in September. I believe the total people expected to be layed off is around 250 people.

One of these plants produces rubber used in cars and the other plant makes electric transformers(primarily for new construction).

The recent tax incentive that  was just passed and signed by the president should help the housing industry once people understand how it works.

I believe the stimulus package earlier this year(that sent checks to all tax payers) was only partly successful and we need one more shot!

Here is my idea:

  • Send all tax payers another tax rebate check 1/2 the amount they received earlier this year.
  • Include with the check a notice if this check used to purchase a new car (made in the USA) then taxpayer would also be entitled to a tax rebate of say $1500 that could be given to the car dealerships as a down payment on the new car(car or truck must get gas mileage of 30 or more per gallon of gas or diesel).
  • Announce the new car incentive to take effect Oct. 1, 2008 so car manufacturers can prepare for the increase in business.

You would have many many people then buying new cars and then this money would trickle down to the factories hiring employees who make materials used in these new cars.

 

These incentives in addition to the election being behind us(assuming people make the right choice for president) should jump start our economy into the new year.

Bill C. Merrell
Merrell Institute ~ Appraisal Education Network - Bohemia, NY
Ph.D. - Merrell Institue

The ones that needed it the most. I don;t think it even caused a dent into their situation.

Just my opinion.

Bill

Aug 11, 2008 08:34 AM
Billie Chubb
Chubb Realty Group - Wilmington, DE

The last thing we need to do is load up on more debt to stimulate the economy. Put in place and then practice pro-business models.

Sadly, American automobile manufacturing is in decline and will continue to decline. It is the unions that have basically put these companies out of business. Now the likes of GM and Ford are starting to become more nimble to compete with cut-throat competitors like Toyota. As sad as the layoffs are...they were part of the problem...Heck, they were one of the huge parts that created the problem.

Aug 11, 2008 08:35 AM
Mike Saunders
Retired - Athens, GA

Mike - I think the biggest stimulation to the economy would be to get gasoline prices down. That would give everybody more discretionary money which would help all areas of the economy for much longer than a $300 - $600 stimulus that would more than likely get spent on other things than cars.

Aug 11, 2008 08:40 AM
Mike Frazier
Carousel Realty of Dyer County - Dyersburg, TN
Northwest Tennessee Realtor

Thanks to all of you for your opinions. I still think one more stimulus is needed that would trickle down to the automotive industry(for cars made in the USA).

Aug 11, 2008 09:12 AM
Larry Brewer - Benchmark Realty llc
Benchmark Realty LLc - Nashville, TN

Mike - I belive the best thing that could happen is to stop giving money to people who don't pay taxes (it really doesn't motivate people), the price of fuel has to come down to a more reasonable level, and that seems to be happening, and we have to keep taxes on businesses from getting out of hand. In order to convince people to invest in business, they need to be able to at least hope to get their investment back.

If certain people get their way, investment in business will stop, because the businesses will have so much tax burden, that they cannot give a decent return to investors.  A good example is exxon. The headlines say that exxon had the largest profit of all time last quarter. What they didn't say was that because of taxes, very little of that shows up in the hands of stockholders. Exxon pays a 2 percent dividend. Not really worth risking your money over. The government on the other hand, had over 20 billion in taxes from Exxon in the last quarter, over 70 percent of the profit went to taxes. If you listen to Barack, that wasn't enough.

i won't be investing in business until some type of reform is made. It's safer just to buy gold coins and put it in a safety deposit box.

 

Aug 12, 2008 12:32 AM
John Guiney
Keller Williams Realty - Quincy, MA
e-PRO, CBR

The taxpayor needs a break not the automobile industry. They have had 35 years to adapt to an oil crisis and have yet to learn. I am sorry for anyone who is losing their job but we can not bail out every business that failed to adapt

Aug 12, 2008 01:07 AM
Mike Frazier
Carousel Realty of Dyer County - Dyersburg, TN
Northwest Tennessee Realtor

Thanks Larry and John for your comments. I sure hope our new President will be friendly to businesses!

Aug 12, 2008 02:13 AM
Gary Woltal
Keller Williams Realty - Flower Mound, TX
Assoc. Broker Realtor SFR Dallas Ft. Worth

Mike, very creative on your part which would stimulate the auto industry. Most think we should just grow a stronger economy with other policies and stop it with the incentive checks. How about quit shipping all the good paying jobs overseas?

Aug 12, 2008 02:37 AM
Mike Frazier
Carousel Realty of Dyer County - Dyersburg, TN
Northwest Tennessee Realtor

Gary,

What I suggested would help jobs in America!

Aug 12, 2008 06:47 AM
George Wilson
Raleigh Cary Realty - Raleigh, NC
Raleigh Cary Realty 919 439 0965

I  cannot wait until we have the election I think many people are on standby and saving their money until that is done and over with and we see the direction we are headed in.

Aug 12, 2008 07:02 AM
Mike Frazier
Carousel Realty of Dyer County - Dyersburg, TN
Northwest Tennessee Realtor

George,

The only thing that I am sure of is your statement that people are waiting to see who wins election!

Aug 12, 2008 07:40 AM
COMPASS PALM SPRINGS | Stewart Penn
COMPASS - Palm Springs, CA
COMPASS Palm Springs - Broker Associate

Having another round of "stimulus checks" will be futile.

The Government needs to address the cause of the problems. Right now, it's equivalent to the Captain "rearranging the deck chairs on the titanic".

We need systemic reform, not band aid fixes.

Aug 12, 2008 07:51 AM
John Hersey
Berkshire Hathaway HomeServices Homesale Realty - York, PA
e-PRO Realtor

Mike,

Interesting thoughts.  As far as US auto makers go, I have to agree that these overpaid union workers do not help the situation. 

Also, as far as not shipping jobs overseas, it is either that or go out of business.  What would I choose?  To stay in business!  America as a whole got into a mess when we started relying on someone else to take care of us.  Think of how it was 100 years ago.  How many self employed people were there compared to employees?  I know, times change but you can not expect someone else to always care about you and your situation.  They went into business for themselves, not the employees.

Aug 12, 2008 08:02 AM
Justin Ukaoma
Vizion KC - Kansas City, MO
Kansas City Real Estate Investments

I like your creativity Mike.  But I don't think we can keep giving out stimulus checks.  Soon we wont be able to keep up with all the stimulus because each round of stimulation comes with more inflation of our money supply.  

Aug 12, 2008 02:02 PM
Trey Thurmond
BCR Realtors - College Station, TX
College Station , Texas Homes

I am so worried about the auto industry. Again foreign manufactures are winning out! Just like foreign oil....come on congress wake up!

Aug 12, 2008 04:20 PM
Ryan Trask
3plains - Shakopee, MN

Forget any more stimulous checks to pump in the economy. We still pay for it in the end and it won't solve the fundamental problems we have currently. We need to deal with our problems and better yet, shut the money presses off. We need to make our dollar stronger.

Aug 12, 2008 07:07 PM
Mike Frazier
Carousel Realty of Dyer County - Dyersburg, TN
Northwest Tennessee Realtor

Stewart,John,Justin,Trey and Ryan,

Thank-you for your comments. You all have valid arguments.

Aug 13, 2008 02:47 AM
Anonymous
Jeffrey Tucker

Well, my first thought is that with the economy the way it is the last thing Americans need is to be going into debt.  The second is that the government will not be able to solve this problem. My third thought is that there is a flaw in your reasoning, but I'll talk more about that later.  Such a scheme would cost billions in tax money.  I believe the last stimulus check cost 168 billion.  So to give every one half of what they got last time would cost 84 billion dollars.  Now 84 billion may be chump change to the government, but even so, to take away that much money from taxpayers will definitely have a negative impact on the economy.

The flaw in your reasoning is called the broken window fallacy.  To save me the time of retyping the whole thing, I'll just quote Wikipedia.

"The parable describes a shopkeeper whose window is broken by a little boy. Everyone sympathizes with the man whose window was broken, but pretty soon they start to suggest that the broken window makes work for the glazier, who will then buy bread, benefiting the baker, who will then buy shoes, benefiting the cobbler, etc. Finally, the onlookers conclude that the little boy was not guilty of vandalism; instead he was a public benefactor, creating economic benefits for everyone in town.

The fallacy of the onlookers' argument is that they considered only the benefits of purchasing a new window, but they ignored the cost to the shopkeeper. As the shopkeeper was forced to spend his money on a new window, he obviously could not have spent it on something else. For example, the shopkeeper may have spent the money on bread and shoes for himself, but now cannot so enrich the baker and cobbler because he must fix his window.

Thus, the child did not bring any net benefit to the town. Instead, he made the town poorer by at least the value of one window, if not more."

Every time the government taxes the people to help the economy it's like breaking a window and thinking you've helped the economy.  So yes, while your plan would temporarily benefit a struggling American auto industry, it would deprive taxpayers of billions of dollars.  What else could those people have spent their money on, if this had never of taken place?  I believe that individuals, not the government, know the best way to spend their money.  Look at the market - it's rejecting domestic products in favor of foreign ones.  Your plan would in essence reward American automakers for building products no one wants.  If anything, the government should get out of the way by decreasing taxes and regulations on the auto industry and let the market take care of itself.

Aug 22, 2008 04:47 PM
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