The Bush Tax Rebate Plan

Bush Tax Rebate Plan White Paper  <- Click to see your rebate

There’s a lot of anticipation and speculation about the tax rebate plan effective the upcoming filing period. Washington should be complemented for an effort to to throw a lifeline to the sinking economy but I’m not so sure this will breathe life back into the existing state of the economy alone. The idea is that rebate receivers will go out spend the additional funds, thus boosting the economy. Some will, some will never see it, some will simply invest it or sit on it.

The ones that won’t see it are the ones that have IRS balances, or will have. I don’t think the IRS is going give money to taxpayers that owe them. That’s something they are not known for, even if they were, most people would still simply send it back to pay off tax balances.

Then consider the large number of homeowners and investers hit with a huge loss of home equity in the last  year,  credit card debt, inflation, and the uncertainty of the economy, and its a sure bet a large chunk of these rebates will ever find their way out of the bank and into the retail arena. But then, the administration didn’t plan to it for this segment,  quote “Proposed stimulus measures linked to housing and mortgages are no longer a top priority after being discussed in White House talks that began in late November”, the official said. ( http://www.freedom4um.com/cgi-bin/readart.cgi?ArtNum=70628 )  Most households will use the rebate to pay down debt or boost savings and investments. The key words here are pay down. Being able to pay off would benefit the taxpayer and the economy.  

Depending upon the size of one’s debt, and the amount of the rebate, this may or may not have an impact on the debt or the economy. Don’t get me wrong, with the state the economy has fallen into, every little bit is welcomed by all affected, but I don’t think this is going to pull a lot of people out of foreclosure or boost the job market. Eight hundred dollars is a stretch to acquire that computer and necessary trimmings for that home based business start up that could realistically contribute to the economy. This is fast money designed to be spent faster. And that’s pretty much going to be the way this pans out.

The recipients that can afford to spend it will do just that, splurge, and close the case. Where and how they spend it would determine the impact and outcome of the plan. Something Washington can’t control, and I feel is the flaw.

Be sure to click the link at the top of this post for a breakout and view of your proposed rebate. It would be interesting to hear  diverse input on this.