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Saturday, January 19, 2008

Rebate, shmebate
Posted by Jill | 1:00 PM
Don't fall for it again, folks.

I'm not sure what we would do if Charles Schultz hadn't created the indelible image of Lucy pulling the football away from Charlie Brown again and again and again, because it's so evocative of life in these here United States during the Bush years.

Remember back in 2001, when you got a check for $300 and they called it a "tax rebate"? And remember how it turned out to be not a rebate at all, but an advance against your tax refund (assuming you got one) resulting from the decrease in the bottom rate from 15% to 10%? I seem to recall a lot of letters to the editor back then from people screaming bloody murder when they found themselves getting back less than they expected because they'd already spent that $300. Never mind that if you're getting a tax refund at all it's because you just gave the government an interest-free loan for a year (far better to have to PAY a modest amount and RECEIVE an interest-free loan FROM the government for a year)...the fact is that you got scammed.

And they're about to do it again:

Experts believe Bush’s proposal hints at a tax-rebate program, much like the one that was conducted in 2001 when Bush was first elected. Where would the rebate come from?

No one knows for sure, but an analysis by the Tax Foundation speculates that the current 10 percent tax bracket would be dropped to 0 percent for one year – meeting Bush’s goal of creating a temporary but swift break.

Currently, single filers pay 10 percent tax on about $8,000 in taxable income, while married couples pay 10 percent on the first $16,000 they earn. By dropping this bracket to zero, singles would pay $800 less and married couples would pay $1,600 less on their 2008 returns.

But because Bush wants to stimulate the economy quickly, the tax cut would be advanced to taxpayers through checks sent by the Internal Revenue Service.


Does this mean that the 10% rate will be dropped for the 2007 tax year or the 2008 tax year? If it's being dropped retroactively for 2007, then it means that you'll be getting your refund before you even do your taxes...assuming you're due a refund. If you're eligible (and the numbers I'm seeing is that this so-called rebate is only going to be sent for single taxpayers earning less than $85,000/year and couples earning less than $110,000) then it really is a rebate against taxes you already paid in. But I suspect (and I'm trying to find confirmation) that this is not a retroactive tax cut, but instead a cut for 2008, with the checks being an advance on potential overpayments for 2008 that would be refunded otherwise in 2009 -- thereby leaving the taxpayer surprise for after the Bush Administration leaves office.

From what I'm reading, it sounds like the cut being proposed is for 2008 taxes -- which means that you may be surprised next year, long after the check is spent and promptly forgotten.

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