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The Planned Tax Rebate

JEROME DA GNOME said:
I do not know why the link no longer works. Strange. :confused:

Here is the title: H.R.5140
Recovery Rebates and Economic Stimulus for the American People Act of 2008
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Thanks :)

SEC. 6428. 2008 RECOVERY REBATES FOR INDIVIDUALS.
  • (a) 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--
  • (1) net income tax liability, or
  • (2) $600 ($1,200 in the case of a joint return).
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How is a "credit against the tax imposed" not a reduction of the tax imposed? They reduce your tax bill.
 
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acuity said:
Thanks :)

How is a "credit against the tax imposed" not a reduction of the tax imposed? They reduce your tax bill.
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A credit against tax over-payed to be payed back when taxes are filed. Read further. Section (g).

Why in section (g) would they need to specify that interest will not be charged against the credit if the credit was extra?

The tax bill is not reduced anywhere in this bill.
 
JEROME DA GNOME said:
A credit against tax over-payed to be payed back when taxes are filed. Read further. Section (g).
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Again, the tax is overpaid only because the individual's tax liability is reduced by the bill.

Why in section (g) would they need to specify that interest will not be charged against the credit if the credit was extra?
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The tax cut is retroactive, so some of it is already due to individuals (because of the tax cut--it wasn't due anyway). They are saying that individuals are not entitled to interest on this

The tax bill is not reduced anywhere in this bill.
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It is according to your own source (which is the government itself). I don't know why you are insisting that your tax has not been cut. Presumably you don't think the US fiscal deficit is going to be any higher as a result then?
 
acuity said:
Again, the tax is overpaid only because the individual's tax liability is reduced by the bill.


The tax cut is retroactive, so some of it is already due to individuals (because of the tax cut--it wasn't due anyway). They are saying that individuals are not entitled to interest on this

It is according to your own source (which is the government itself). I don't know why you are insisting that your tax has not been cut. Presumably you don't think the US fiscal deficit is going to be any higher as a result then?
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Nothing in the bill reduces any individual taxpayers liability.
 
I can't make you accept it. Your own (US government) link says this is a tax cut. (Some) politicians, such as Paul Ryan (House Budget Cttee) would not be fretting about the increase in the deficit if this was revenue neutral. Wall Street would not (contrary to what you may think) be taken in by a revenue-neutral timing shift in taxation, which would be expected to have zero economic impact.

I am drawn back to my previous suspicion that your profound distrust or dislike of government (tax specifically) closes your eyes to the truth.

:)
 
JEROME DA GNOME said:
Keep in mind that legally credit is a debt owed.
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I don't know what you mean by that.

A tax credit reduces the amount of tax you owe. If you owed $100 in tax, but then you get a tax credit of $10, now you owe only $90. (If you already paid $120, you'll get $30 back instead of $20.)
 
69dodge said:
I don't know what you mean by that.

A tax credit reduces the amount of tax you owe. If you owed $100 in tax, but then you get a tax credit of $10, now you owe only $90. (If you already paid $120, you'll get $30 back instead of $20.)
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It is a credit against the overpayment you have already made to the government in your withholding.

There is ZERO net gain. Just an advance on the money you are already due after you file your return.
 
JEROME DA GNOME said:
It is a credit against the overpayment you have already made to the government in your withholding.

There is ZERO net gain. Just an advance on the money you are already due after you file your return.
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You keep saying that, but I don't know why you think so. I've read the bill too, and that isn't my interpretation of it.

Do you disagree with the general definition of "tax credit" that I gave? Consider other kinds of tax credit---for example, the Earned Income Credit. When it applies, doesn't it reduce the amount of tax that needs to be paid, rather than just change the timing of its payment to the IRS?

Perhaps the problem is with the meaning of subsections (f) and (g) of the new section 6428? I am not entirely sure, but as far as I can tell, this is what they mean: Subsection (a) says that the credit really applies in 2008. Subsection (g) says that it can be applied in 2007. Subsection (f) says that if it's applied in 2007, it can't also be applied in 2008. (If only part of it is applied in 2007, the remainder can be applied in 2008.)

But, in any case, the net result is that, over the two years, you do get to pay less tax than you would have had to pay without this bill.
 
Jerome Da Gnome seems to be in denial about this. This is net new money to individuals. If it wasn't there would be no point to it.
 
I do not claim to be an expert, nor do I claim to be able to make sense out of reading the actual bill. However, I heard an interview on NPR the other day (I'm sorry, I can't remember who it was with, but it was someone in a position to know) and this specific question was asked. The question was basically, "Will this rebate reduce the tax refund that people will be receiving later?" And the answer was an unequivocal "No." The explanation was that this was a one-off deal that has nothing to do with the normal tax refund you will be entitled to (if any).

There is a question as to whether the rebate will need to be claimed as income on your state taxes next year. I heard (also on NPR) that my state of Missouri is passing a specific rule that will make the tax rebate non-taxable so that it will not have to be claimed as income. They also did that in 2001.
 
wolfgirl said:
I do not claim to be an expert, nor do I claim to be able to make sense out of reading the actual bill. However, I heard an interview on NPR the other day (I'm sorry, I can't remember who it was with, but it was someone in a position to know) and this specific question was asked. The question was basically, "Will this rebate reduce the tax refund that people will be receiving later?" And the answer was an unequivocal "No." The explanation was that this was a one-off deal that has nothing to do with the normal tax refund you will be entitled to (if any).

There is a question as to whether the rebate will need to be claimed as income on your state taxes next year. I heard (also on NPR) that my state of Missouri is passing a specific rule that will make the tax rebate non-taxable so that it will not have to be claimed as income. They also did that in 2001.
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Colorado is doing the same thing. The proposed change in the tax would lower the net federal income, which the state uses as their basis for taxation. As it goes down, so does their tax base. The state looks to loos something like about $120 million from this.

Jerome is right about the earlier tax "rebate", but that was, as I remember, a special case where a boost was needed to public spending in the short term, so they devised a revenue-neutral way to do it. The current payback is a credit against taxes owed, not simply an advance on withholding. It will decrease government revenues by about $150 billion (give or take a couple of tens). It is a one-time happening, not a step-change in the tax code.
 
(f) Coordination With Advance Refunds of Credit-

(g) Advance Refunds and Credits-


The above is from the bill passed by the House.

Let us look at the tax code which is referenced in the bill as to the meaning of refundable credit.

Refundale credits

# § 31. Tax withheld on wages
# § 32. Earned income
# § 33. Tax withheld at source on nonresident aliens and foreign corporations
# § 34. Certain uses of gasoline and special fuels
# § 35. Health insurance costs of eligible individuals
# § 36. Overpayments of tax


They are ADVANCING the refund of credit.




THIS IS A SCAM!!! NOBODY IS GETTING ANYTHING MORE THAN THEY HAVE OVERPAYED!!!
 
I went back and looked it up, Jerome. In 2001 GW managed to get his tax cuts passed. It was mainly targeted to the rich, but to show the little people that they, too, got some small benefit, he mandated that the IRS should send out rebate checks in lieu of the lower rates. What presumably would have happened without the checks is that the average taxpayer would have seen slightly less tax to pay the next April due to lower rates; he'd have gotten back a bigger refund. With the checks, he got his piece earlier, praise GW, but had to pay that amount back in April, along with the smaller tax due. It was, indeed, slight of hand: the decrease in taxes was real enough, but the advance was just that - an advance, due to be reimbursed when the taxes were due.

This one, in 2008, is not an overall tax rate decrease. It is a one-time credit. When you get your refund back it will be $600 (or some such) larger than it would have been. It actually has nothing to do with the taxes; that is just an easy way to figure and distribute it.

They are ADVANCING the refund of credit.
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No advancing to it. You get the credit, either as less taxes or more refund; you don't have to pay it back (at least, not in the usual sense; yes, certainly, you will, sooner or later, pay for it with more taxes).

Yes, you can finagle your deductions and move the withholding back and forth. In general, you get to pay a penalty if you don't withhold an amount greater than or equal to 80% of your final tax bill, and the gov gets all the interest on overpayments ("refunds"). 2nd law of thermo in action. But it's not a scam; it is (if it gets passed and implemented) a bona fide credit in the neverending ledger sheet between you and Uncle, unlike that check in 2001.
 
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shadron said:
This one, in 2008, is not an overall tax rate decrease. It is a one-time credit. When you get your refund back it will be $600 (or some such) larger than it would have been. It actually has nothing to do with the taxes; that is just an easy way to figure and distribute it.



No advancing to it. You get the credit, either as less taxes or more refund; you don't have to pay it back (at least, not in the usual sense; yes, certainly, you will, sooner or later, pay for it with more taxes).

Yes, you can finagle your deductions and move the withholding back and forth. In general, you get to pay a penalty if you don't withhold an amount greater than or equal to 80% of your final tax bill, and the gov gets all the interest on overpayments ("refunds"). 2nd law of thermo in action. But it's not a scam; it is (if it gets passed and implemented) a bona fide credit in the neverending ledger sheet between you and Uncle, unlike that check in 2001.
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Did you just ignore the words of the law that was passed and the words contained in the tax code which is referenced by the law?

Could you please point out in the law where it is stated that there is a net tax decrease?
 
JEROME DA GNOME said:
Did you just ignore the words of the law that was passed and the words contained in the tax code which is referenced by the law?

Could you please point out in the law where it is stated that there is a net tax decrease?
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Perhaps you think I cannot read. From your search link, HR5140 (as passed in the HR):

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--

`(1) net income tax liability, or

`(2) $600 ($1,200 in the case of a joint return).
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In plain language, eligible people get a credit of up to $600 against their Subtitle A (federal income) tax in 2008. No "advance" (as you showed in your quote; must have been some other version of the law); just "credit". Is that plain enough, or do we need a Funk and Wagnall's to define the word? NOTE: As I said before, it is a one time amount - it is NOT a change in rate, like the 2001 changes were; it's NOT a change in the tax code itself. It is a one time "gift" from your kindly old Uncle to grease the economic wheels and get business off juicy Republican backside for a while.

Two other collateral lines of proof:
- It is costing $150 billion. If it were just a advance, it wouldn't cost anything to the gov averaged over the tax year, except administrative costs.
- No one else is saying anything about it being an advance that I know of, except for you, and plenty of experts and pseudos have chimed in. When the 2001 advance rebate was done, its nature was all over the net - it confused a lot of easily-confused people. Today, not a peep (except for you).

Now Jerome, I don't need to do the "bowels of Christ" speech to you. Just, please go back and take another look.
 
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JEROME DA GNOME said:
(f) Coordination With Advance Refunds of Credit-

(g) Advance Refunds and Credits-

The above is from the bill passed by the House.
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They are just the titles of subsections (f) and (g). Have you read the contents of those sections? And subsection (a), too?

JEROME DA GNOME said:
Let us look at the tax code which is referenced in the bill as to the meaning of refundable credit.

Refundale credits

# § 31. Tax withheld on wages
# § 32. Earned income
# § 33. Tax withheld at source on nonresident aliens and foreign corporations
# § 34. Certain uses of gasoline and special fuels
# § 35. Health insurance costs of eligible individuals
# § 36. Overpayments of tax
Click to expand...

That list is not the meaning of "refundable credit". It is a list of examples of refundable credits. The meaning of "refundable credit" is that it is a tax credit that can reduce below zero the amount of tax you owe (with the result that the government ends up owing you money instead of the other way around). The meaning of "tax credit" in general is that it is a reduction in the amount of tax you owe.

The bill we are discussing creates a new tax credit that didn't exist before, so of course it doesn't appear in an old list of tax credits.

JEROME DA GNOME said:
They are ADVANCING the refund of credit.
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They are creating a new tax credit for 2008, which they're allowing you to take, in advance, in 2007 instead.

JEROME DA GNOME said:
THIS IS A SCAM!!! NOBODY IS GETTING ANYTHING MORE THAN THEY HAVE OVERPAYED!!!
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I still don't know why you think that. Is it really because you've read the bill carefully, and that's what you think it says?
 
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