Gift Card Stimulus: Participating Organizations

March 1, 2009

In my proposed Gift Card Stimulus thought experiment, I already suggested that tax payers, both individuals and businesses, receive gift cards worth 1/3 of income taxes paid in 2007. This works more like a tax break except that the twelve month spend-it-or-lose-it rule ensures that the money is spent rather than stashed away. This helps address the one big advantage governments have over individuals/businesses, governments can spend like nobody’s business (no pun intended). The disadvantage  is that governments do not have the money to spend on long term infrastructure (e.g. transportation, health, communication, energy). 

So why not allow government organizations to submit project proposals, with costs attached, and allow the Gift Card Stimulus to be allocated to the project of the Gift Card holder’s choice. Would you choose to give to bridge maintenance rather than purchase a new 50 inch TV?

So what else can you spend it on? I think you need to start off with “everything”, that is, any product or service that you can normally purchase. You might want to disallow some but I’m not exactly sure if its worth the effort. Food, gasoline, and utilities are things people will spend money on anyway so you may want to exclude them though it does seem kind of mean to do so. So lets say anything that you normally pay sales tax on is allowed plus government projects.

Remember, you will have to pay back the stimulus in tax eventually (say over 5 years). Those that don’t spend their Gift Cards don’t have to pay anything back.

It makes it feel more real though doesn’t it? Your money that you will have to pay back. Your choice that you will want to make a difference. Your skin in the game and not someone else making all the decisions on your behalf. 

Actually it is a bit depressing. Maybe that is another advantage of government spending. President Obama is far more optimistic about spending your money in a way that helps the economy than I think you or I would be spending our share ourselves. Maybe ignorance is bliss.