* As I have said here on many occasions Congress tends to take the easy way out in most situations – reacting to a problem with a quick temporary fix rather then responding to it by dealing with the causes. It’s a miracle that the country continues to run properly, or at least adequately. The Tax Policy Center’s TAX VOX blog agrees with me and so points out in its commentary “Stimulus: Treat the Disease, Not the Symptoms”. As posting author Howard Gleckman says, “whatever they do, it isn’t likely to help fix the underlying causes of the current slump.”
* Jim of BLUEPRINT FOR FINANCIAL PROSPERITY asks his readers for “Your Take: Would You Spend A Stimulus?”. He has had over 30 responses, and it appears that most would do exactly what I would if handed a tax-free $800.00 or $1,600.00 check – pay down debt and/or invest (in both current and retirement funds). In the minority was Tom, who would “fill up my gas tank about 4 times with the stimulus package and then buy myself a $0.99 double cheeseburger with the left over cash”.
* TAX GIRL Kelly Phillips Erb, who in an earlier post to her blog found that we tax professionals hate the idea of tax rebage checks, reports in her post “Bush Fix on the Economy Doesn’t Persuade the Dow” that the Dow isn’t biting either. Kelly states that, “After Bush’s announcement of the plan on Friday, stocks slipped, with the Dow ending at a 10-month low”.
* Trish McIntire of OUR TAXING TIMES joins me, and I would expect most other tax preparers, in declaring “I Hate These Things”, referring, of course, to the proposed tax rebate checks. She lists many excellent reasons why advance rebate checks are no good for anyone. Especially for tax preparers, because we “will have to deal with all the people who don't get a check or the amount they think they should have”.
She also points out a basic inequity in the way the rebate check works, at least historically – “If a taxpayer's rebate was less than their 2008 tax return entitles them to, they will get the additional money when they file their return. But, based on previous rebates, those who get a larger rebate than they deserve will get to keep that money. That is wrong.”
Her post ends with an excellent description of these checks – “tax rebates are for show and glory and not a good fiscal policy”.
* Joe Kristan of the ROTH AND COMPANY TAX UPDATE BLOG has a better idea for economic stimulus:
“Let's load our B-52 bombers with $20, $50 and $100 bills and conduct low level simulated bombing runs dropping the cash over areas affected by the mortgage crisis. Surely the sight and sound of the big birds skimming the treetops of Southern California will stimulate something, and it will be at least as effective as the rebate plan.”
By the way - Joe, thanks for the link!
* The Tax Foundation weighs in with two posts on the subject – “Economic Benefits of Fiscal Stimulus Likely to Be Small” and “Tax Revenue and Distributional Effects of Lowering 10% Bracket to Zero for 2008”.
* As usual, TAX PROF Paul Caron provides the ultimate round-up of commentary on the topic in his post “Do Tax Rebates Work?”. How come Paul never includes me in any of his round-ups?
So what do you think?