Universal Tax Break

Historically, the U.S. economy has cycled through booms and busts. Taxes are an important driver of both conditions. When an economy is in boom - particularly after a few years - spending starts to slow down because uncertainty about how long it will last creeps in. Government attempts to spur spending by issuing tax rebates, or 'stimulus' refunds.

Why not just plan to give everyone a tax-free year every few years or so? Make it automatic and based on an uneven number of years so it does not always factor in an election year.

Knowing, in advance, that you were going to have, at regular intervals, an 'additional' chunk of cash large enough to spend on things like home improvements, major item purchases or, better, personal debt reduction would increase individual confidence and make them more willing to take on manageable debt loads.

Net revenues to the government would follow a cyclical pattern that would see a drop in revenue in one year but increased revenues in subsequent years enough to at least meet the (temporary) deficit caused by the tax holiday. And Congress would have incentive - not that they don't already - to see to it that the temporary deficit caused by the holidy is as minimal as possible by controlling spending in the years prior to the holiday. Certain government functions, such as funding a war, would still be unaffected by a tax holiday, but would determine the extent of a deficit.

Tax rates would not necessarily change. Sales and other taxes would not be affected - though perhaps they could also be given a holiday on the same basis, just not the same year.

A pre-planned tax holiday for everyone would eliminate the debate over tax cuts benefiting the rich over the poor.