Tuesday, December 9, 2008

Test a Theory

The Republicans say the best way to get the economy going is to cut taxes. Well, let's test that theory with the automotive industry. What would happen if we cut sales tax on vehicle purchase in half for the first quarter of 2009? This is what I would see happen.

1) The automotive industry would sell more cars and earn more money, thus reducing the need for a bailout package.

2) More auto loans means more revenue for banks and credit unions. Thus reducing the need for a bailout package.

3) State revenue will probably go down unless car sales double. But I think the revenue would go up since there would be a lot more car sales.

I know this seems like a simple idea, but what are the reasons why this wouldn't work?