Tax Rebate For Economic Stimulus
evawhite on July 18th, 2008
116 Million US families and individuals got tax refunds this May as part of the 2008 economic stimulus program. With the sub-prime housing crunch hitting property owners and households hard it was a good idea to inject some funds straight into the mass population. The federal bank doing its bit to increase liquidity for the banks and the IRS is throwing in its share to help the masses.
Families would have received $1200 and individuals would have got $600 those with children will get an additional $300 per child. There was of course a cap on total household income to qualify for the rebates, $87000 annually for individuals and $174000 for families. The rebate amount decreased $75000 onwards for individuals and starts decreasing from $150000 onwards for families.
The President said ‘Go out and spend the money’ and many people did. They used it to buy the much-needed new eye glasses or on vital house repair, some used to buy that LCD TV they always wanted and a good part of the people used it to pay off their debt. In times of economic depression and liquidity is good. Giving tax rebates to the citizens is a novel and a very helpful gesture. There was even an ‘IRS Free File’ scheme for the people below the minimum taxable bracket but could yet apply for the rebates.
There were people (mostly richer) who have been critical of this move, these people really have no use for $600 or even $1200. The view is that the 168 billion dollars for economy injection could be better used. This opinion is of the minority. The rebates have all come and the US consumer spending index rose by 0.8% in May.
Agreed that only very few countries world-wide are capable of such measures but isn’t it worth a thought for the other countries as well? There is also the opinion that instead of cash; vouchers could have been given. Not best option in the US tax rebate case. People had the freedom to do what they wanted with that money. Pay off bank and non-bank debts which will only accept cash. Save that money. You can’t save vouchers. Many families put the rebates into their children’s college fund. No vouchers can work there.
Other countries could implement something similar, those don’t have that kind can do it the voucher way. For example offer gasoline vouchers for the folk who are in normal jobs but fuel costs heavily eating into their earnings. Or grocery vouchers. This could be beneficial in both ways, to the consumer by the vouchers and the vendor whose goods can be subsidized by the government.
