Thursday, January 24, 2008

A Tax Rebate that isn't.

In politics, what do you call giving $300 in tax money to people who don't pay taxes?

A Tax Rebate:

(The Associated press via Yahoo)

Individuals who pay income taxes would get up to $600, working couples $1,200 and those with children an additional $300 per child under the agreement. Workers who make at least $3,000 but don't pay taxes would get $300 rebates.

All is not lost however, Republicans in Washington are
pleased that the bulk of the rebates — more than 70 percent, according to an analysis by Congress' Joint Tax Committee — would go to individuals who pay taxes.

Wow, so much to be thankful for, 70% is an actual rebate in this rebate and only 30% of the money isn't a rebate (a return of money you sent to Washington), it's an out-and-out handout (Of your money to someone that didn't pay any income tax in).

At least so far we've escaped some of the dumber attempts to stimulate the economy:
Pelosi, D-Calif., agreed to drop increases in food stamp and unemployment benefits during a Wednesday meeting in exchange for gaining the rebates of at least $300 for almost everyone earning a paycheck, including those who make too little to pay income taxes.

How an increase in food stamps stimulates an economy in a useful manner is perplexing, as is increasing unemployment benefits - you want people working and buying stuff, not sitting on the dole, and for that you need business to grow and hire employees.

But not to worry the Democrats may be able to wrangle these back into the final bill:
Sen. Max Baucus, D-Mont., the Finance Committee Chairman, said leaving out the unemployment extension was "a mistake," as he announced plans to craft a separate stimulus package in the Senate starting next week.

Majority Leader Harry Reid said the goal is to send the package to the White House by Feb. 15 for President Bush's signature. Reid said senators would want to look at add-ons including the unemployment extension and possibly money for highway projects.

The highway projects I can get behind as highways are at least useful and certainly can use much repair, and this will hopefully crowd out some of the useless pork but i have my doubts.

The plan started well and made sense:
Bush has supported larger rebates of $800-$1,600, but his plan would have left out 30 million working households who earn paychecks but don't make enough to pay income tax, according to calculations by the Urban Institute-Brookings Institution Tax Policy Center
Well yes, if you don't pay income taxes, why should you get an income tax refund?

Unfortunately the bill has a few poison pills that may saddle us all with even greater debt and more future crises:
To address the mortgage crisis, the package also raises the limits on Federal Housing Administration loans and home mortgages that Fannie Mae and Freddie Mac can purchase to as high as $725,000 in high-cost areas. Those are considerable boosts over the current FHA limit of $362,000 and the $417,000 cap for Fannie Mae and Freddie Mac's loan purchases.
Can you say watch the government swoop in to buy up even bigger worthless loans or loans on the brink of foreclosure that they couldn't buy before -- the result of irresponsible buyers and mortgagees and thus relieve them both of responsibility? A nice government bailout if you can get it but not if you're a responsible person, did not buy more house than you can afford and you're about to watch the irresponsible be rewarded at your expense.

Now for the understatement of the article
Conservative Republicans, meanwhile, were likely to be restless over tax rebates going to those without income tax liability.

Gee, ya think?

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