The Planned Tax Rebate

acuity said:
But it's only an overpayment because they are cutting taxes.
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All tax refunds are an overpayment. This is the scam called withholding. People think that the government is giving them extra money, most do not understand that they gave the government an interest free loan for 6 months.


Like if your employer says "I'm giving you a bonus at the end of this year and actually you can have half of it now", and you didn't normally get bonuses. Would you say that was a scam and resign in disgust?
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In this instance no one is getting a bonus. They are just getting their regular pay and receiving part of it in a lump sum and being told that it is a bonus.
 
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JEROME DA GNOME said:
What about government "foolishly" borrowing/spending and most importantly creating new money?
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Yes they could be doing that. Depends if their incentives are "Stay in power come what may and exploit the people for our own ends interminably" or "Manage the conomy in society's interest".

They are not cutting taxes this time.
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Then how come some people who don't even pay tax will qualify for some money? Those people wouldn't get it next April would they?
 
JEROME DA GNOME said:
In this instance no one is getting a bonus. They are just getting their regular pay and receiving part of it in a lump sum and being told that it is a bonus.
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The government "pays" taxpayers?

I suppose your posts start to make sense if you believe that all taxation is "theft". Is that it?
 
acuity said:
Then how come some people who don't even pay tax will qualify for some money? Those people wouldn't get it next April would they?
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Yes they would. This is called the Earned income credit. This is a tax refund on taxes not payed. This is a basic redistribution of wealth with an Orwellian name.
 
JEROME DA GNOME said:
Yes they would. This is called the Earned income credit. This is a tax refund on taxes not payed. This is a basic redistribution of wealth with an Orwellian name.
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I can't claim detailed knowledge of US tax codes. In summary, your claim is that nobody is getting any net reduction in tax they pay? Is that correct?
 
acuity said:
No I'm not trying to mischaracterise you. Do you think taxation is morally OK? Clarification on this would help.
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I do think that society can choose to collect tax for the funding of government with the purpose of securing individual rights.

I do think that labor taxes are immoral.
 
JEROME DA GNOME said:
Yes, that is correct.
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The deal will provide cheques of between $300 and $1,200 to some 117m Americans, with payments phasing out for individuals earning more than $75,000 a year and couples earning more than $150,000 a year. Other measures include new tax breaks for large companies and small businesses, designed to bolster investment, and a lifting of the limit for the purchase of mortgages by Fannie Mae and Freddie Mac from $417,000 to $625,000.
Story on FT.com
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I have not uncovered anything that says definitively (in lay terms) that the rebate cheques are money that individuals would never have received without this "deal". That seems to be assumed, because otherwise I can't see why newspapers like the FT and the Economist would not point out that getting a 6-12 month advance on money you are entitled to anyway should not be expected to influence the economy much. So this point is not resolved satisfactorily for me. You may be right. I doubt it. But I have not proved you wrong :)

"New tax breaks for businesses" is vague beyond "incentives to invest" and laxer rules on write-offs of capex.

The significantly increased upper limit on qualifying mortgage loans from FNMA and FHLMC does seem to allow a large number of homeowners to reset their mortgages at lower interest rates though, since I understand that conforming loans usually have rates at least 1% lower than non-conforming ones.
 
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LostAngeles said:
OK, now riddle me this:

While I should (hopefully, fingers-crossed) be entering shiny new tax brackets next year, how can I, a student making slightly better than minimum wage, pretty much living off of student loans, get a, "tax rebate," of $600? I think my taxes this year will have been something like $500, which I'm going to get back. (I don't claim EXEMPT because I like getting my tax refund. It's like forced savings for college students.)

How, do I ask you, do I get an extra $600?

How?
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LA, I understand your angst.

My tax bill for 2007 will be about $23,000, so if you feel really bad about all this, you could send me your $600 to offset what I had to pay.


:D :D :D
 
Geek Goddess said:
LA, I understand your angst.

My tax bill for 2007 will be about $23,000, so if you feel really bad about all this, you could send me your $600 to offset what I had to pay.


:D :D :D
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Actually, because of how it all works out, it looks like I make just under enough to get that rebate.

Boo-hoo. I still wept when I opened my W-2 yesterday.
 
LostAngeles said:
Actually, because of how it all works out, it looks like I make just under enough to get that rebate.

Boo-hoo. I still wept when I opened my W-2 yesterday.
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Make sure you do file a return. At that level of income you will receive all of your withholding, and probably qualify for the earned income credit.
 
Jerome Da Gnome:

I can't link to it because its on restricted sites, but all the research material I'm seeing written by economists and analysts at US investment banks point to the 2008 "tax rebate" as a payment to households that would not occur at all unless the stimulus bill being drawn up is passed by your legistalture & executive. However it is a one-off windfall because the tax cut is temporary. It will not recur next year. So if aggregate spending is boosted this year (assume not everyone saves the tax rebate) that boost will approximately go in to reverse next year all else equal. But the money individuals receive in the second quarter of 2008 would not be coming to them anyway (in the absence of this bill).

The Economic Growth & Tax Reconciliation Relief Act 2001 was a permanent tax reduction (creating a 10% starting income tax rate) and it was retroactive (backdated to apply in respect of a date earlier than it was announced). This also represented money that would have been taken as tax (for good) if the EGTRRA had not been enacted. Because it was retroactive, money was due to individuals immediately (in 2001) and the government "advanced" this distribution rather than allow it to be reclaimed by individuals the following year. But it was still money that they only received because there was a tax cut.

So I don't agree with your claim that nobody is getting a net tax cut.
 
JEROME DA GNOME said:
Make sure you do file a return. At that level of income you will receive all of your withholding, and probably qualify for the earned income credit.
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Oh, I always do. Not just for the return, but because I have to file for the FAFSA for Summer Financial Aid in order to graduate.

*shakes her fist at her department's scheduling*
 
acuity said:
Jerome Da Gnome:

I can't link to it because its on restricted sites, but all the research material I'm seeing written by economists and analysts at US investment banks point to the 2008 "tax rebate" as a payment to households that would not occur at all unless the stimulus bill being drawn up is passed by your legistalture & executive. However it is a one-off windfall because the tax cut is temporary. It will not recur next year. So if aggregate spending is boosted this year (assume not everyone saves the tax rebate) that boost will approximately go in to reverse next year all else equal. But the money individuals receive in the second quarter of 2008 would not be coming to them anyway (in the absence of this bill).
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I doubt it. I would prefer to see the bill as opposed to a non-linked opinion.
 
acuity said:
Jerome Da Gnome:

I can't link to it because its on restricted sites, but all the research material I'm seeing written by economists and analysts at US investment banks point to the 2008 "tax rebate" as a payment to households that would not occur at all unless the stimulus bill being drawn up is passed by your legistalture & executive. However it is a one-off windfall because the tax cut is temporary. It will not recur next year. So if aggregate spending is boosted this year (assume not everyone saves the tax rebate) that boost will approximately go in to reverse next year all else equal. But the money individuals receive in the second quarter of 2008 would not be coming to them anyway (in the absence of this bill).
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Keep in mind that legally credit is a debt owed. This bill is advancing a credit to the tax payed on what the government owes the taxpayer in over-payments of tax.

I am 100% correct that the government is only advancing what it owes.

Here is the bill passed by the House

In General- In the case of an eligible individual, there shall be allowed as a credit against the tax imposed by subtitle A for the first taxable year beginning in 2008 an amount equal to the lesser of--
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(g) Advance Refunds and Credits-

`(1) IN GENERAL- Each individual who was an eligible individual for such individual's first taxable year beginning in 2007 shall be treated as having made a payment against the tax imposed by chapter 1 for such first taxable year in an amount equal to the advance refund amount for such taxable year.

`(2) ADVANCE REFUND AMOUNT- For purposes of paragraph (1), the advance refund amount is the amount that would have been allowed as a credit under this section for such first taxable year if this section (other than subsection (f) and this subsection) had applied to such taxable year.

`(3) TIMING OF PAYMENTS- The Secretary shall, subject to the provisions of this title, refund or credit any overpayment attributable to this section as rapidly as possible. No refund or credit shall be made or allowed under this subsection after December 31, 2008.

`(4) NO INTEREST- No interest shall be allowed on any overpayment attributable to this section.'.
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