Friday, January 25, 2008

Revised Tax Rebate

Congress announced a revised tax package yesterday. People who make at least $3k and pay taxes would get back $600 back and $1200 for couples, and each child would be $300 extra. People who don't pay taxes but make at least $3k would recieve $300 back. The rebate phases out for individuals who make more than $75k and couple making $150k.

Lower than the package suggested by Bush, this new rebate of taxes cover more families who do not pay income taxes. Hence the lower rebate amount instead of $800/$1600 initially suggested.

What to do with this money? Well the government is hoping we'll spend it to boost the country. To help the economy grow. However, I'm not sure I understand how we're growing the economy by causing the government to take on more debt by giving back taxes while still spending foolishly?

Since 2000 there is no balanced budget. The US government is in a huge deficit and they keep digging themselves deeper. I wonder how can a government expect people to be fiscally responsible when they themselves show no leadership or example? The example set by our government is one of get into debt and someone else will hopefully bail you out. And it's not your fault there's debt, it's someone else's fault/problem.

But seriously, will this really help people? Will it really stimulate the government? Perhaps making serious changes to our government spending, telling people that it's wrong to be in debt, and showing how to stick to a budget would do more consumers good than just handing out checks which don't solve the problem.

This money if we ever see it won't change our lives. It's a balm on the problem our government is ignoring. If they really wanted to help they would start looking at the real problems, not just a band-aid sticker solution.

What will I do? I have no idea, when and if I see the check I'll decide then. Until then it's just the current administration prentending to care about the economy. Until I see changes and a real budge why should I listen to this administration about my finances? I don't think their succeding at all.

I hope everyone who gets the rebate uses it to pay off debt or save, rather than spending it like the government expects.

9 comments:

MV Bound said...

If the government wants you to spend the Tax rebate why do they insist on phasing it out based on income. Couldn't someone over the income threshold spend $600-1,200 just as well as someone below the $75/125k levels?

Overall, I'd agree its a quick fix with little or no long term effect.

Living Almost Large said...

I have no idea either.

change is a good thing said...

Amen! I agree completely with everything you say here! It's just a bandaid! I know I will be putting my rebate in savings, if we ever do actually see them! :)

Financially Broke said...

People in lower income brackets will use the money in the economy before those in higher income brackets, based on necessity. These people who develop these types of "rebates" (read, wealth redistribution) are not idiots. They have years of statistical "proof" that shows how Americans use their money. Heck, all you need to know is each year at tax refund time, lots of places make LOTS of money. Why? Because consumers have "FREE MONEY!" Yippeee!

They have already projected percentages of people who will spend it all in the economy, those who will use it to pay down debts, and those who will save it. Based on these mathematical projections it is thought that enough of the money will go back into the economy, retarding a recession.

Seeking Financial Camelot said...

I have to agree that this is a band-aid. We have a serious problem that is going to get way worse. And the government wants to confuse us by throwing a little bit of money at us to make us believe they have it under control. Any wise person will take this money and pay off some debt with it. No debt? save it.

We are in serious trouble and with the foreclosures on homes, and the defaulting on consumer debt the banks will make money the only place that they can. By jacking up rates and fees on those of us they know will pay their bills

johnstonteam said...

This is one of those "in how many notes does it take you to change your tune" moments.

For years, the government has been harping on we need to be savers. Now with this rebate, they are telling us to spend it.......don't save it.

chris

Jim ~ mydebtblog.com said...

I see this as a drop in the ocean. Granted the figure is smaller than the original proposed figures, it's some extra money from taxes coming back. What I have a problem with is how people who don't even pay taxes get this money, and then the income limits that prevent people who paid a lot more taxes from getting their money back. It is those individuals who are having their money handed to people who didn't pay any taxes.

I don't know if this is necessarily going to do anything for our economy, but it's extra money I can put towards debt I never counted on having. The way I see it I can help the economy by spending money I have faster by paying off my debt. Individuals who didn't pay any taxes are going to blow this money and it won't make a difference. Then they added this extra $300 per child addition so they can buy their kid a Wii they didn't get for Christmas. Another stupid thing is don't expect the check until May. This is an election year and giving out money helps gain them votes.

Living Almost Large said...

So instead of righting ourselves we're about to go out and spend it. Oh well.

Kyle said...

I agree, it is a short term bandaid for a bigger problem. I think it will make retail number go higher for a few weeks, but come on, it ain't going to turn the economy around. No surprise this is happening in an election year either. Government would have been much better off lowering payroll taxes for the people that actually create jobs in this country.