Dems, White House debate who should get tax rebates

[stephanie]

By JEANNINE AVERSA
Associated Press

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WASHINGTON — The poor are the people most likely to spend a tax rebate, if they are handed one in an economic revival plan. Whether that happens depends on who prevails — the White House or the Democrats who run Congress.

Democrats want to make sure rebates get to more of the poor, including those who have jobs but earn too little to pay income taxes.

The idea is the more that people spend, the more it will energize an economy threatening to slide into a recession for the first time since 2001.

Many economists say the lower that people are on the income ladder, the more probable it is that they will spend a rebate and spend it quickly — just the shot for the ailing economy.

These people are more likely to be living from one paycheck to the next, without other assets to draw on.

"There's a risk of a downturn" in the economy, President Bush said Saturday in his weekly radio address.

"Congress and my administration need to work together to enact an economic growth package as soon as possible," he said.

The White House, for now, envisions providing one-time rebate checks to people who pay federal income taxes. That would leave out millions of the working poor, who do not make enough to pay income taxes but do pay Social Security and Medicare payroll taxes.


read the rest and comments..
http://www.chron.com/disp/story.mpl/headline/natwld/5469392.html

[gabosaurus]

Tax rebates should go out to no one.
Where would the money come from? Who is going to pay in the long run? If the rebates are partially funded by budget cuts, what gets cut?
Tax rebates rarely stimulate consumer spending. Those who normally make up the consumer sector are going to do it anyway. Alcoholics are going to drink more. Gamblers are going to gamble more.
This is nothing more than political grandstanding.

[PostmodernProphet]

if it's going to be a tax "rebate" doesn't it have to go to someone who is paying taxes?.......

[red states rule]

By JEANNINE AVERSA
Associated Press

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Email Get section feed
Print Subscribe NOW
Comments (16) Recommend
WASHINGTON — The poor are the people most likely to spend a tax rebate, if they are handed one in an economic revival plan. Whether that happens depends on who prevails — the White House or the Democrats who run Congress.

Democrats want to make sure rebates get to more of the poor, including those who have jobs but earn too little to pay income taxes.

The idea is the more that people spend, the more it will energize an economy threatening to slide into a recession for the first time since 2001.

Many economists say the lower that people are on the income ladder, the more probable it is that they will spend a rebate and spend it quickly — just the shot for the ailing economy.

These people are more likely to be living from one paycheck to the next, without other assets to draw on.

"There's a risk of a downturn" in the economy, President Bush said Saturday in his weekly radio address.

"Congress and my administration need to work together to enact an economic growth package as soon as possible," he said.

The White House, for now, envisions providing one-time rebate checks to people who pay federal income taxes. That would leave out millions of the working poor, who do not make enough to pay income taxes but do pay Social Security and Medicare payroll taxes.


read the rest and comments..
http://www.chron.com/disp/story.mpl/headline/natwld/5469392.html

Who should get tax rebates?

How about the people who pay the taxes?

Or is that to deep for some to understand?

[Classact]

"Congress and my administration need to work together to enact an economic growth package as soon as possible," he said.Economic growth happens when new employment opportunities happen. For new employment opportunities to occur the banks need to lend money to those wanting to start a business.

That is the key problem when talking about economic growth. The problem is the banks are going to be stingy with loans because they have lost so much money on the sub prime loans (their fault). The economic growth will slow down will continue for a while until banks once again feel safe to loan money. This will happen when people have great credit or have 20% down payment on a house... they need "capital" to lend capital... no one wants to by mortgages from banks with bad reputations of losing them money in the past. They have to build a new trust of being responsible before individuals will buy mortgages from the bank.

Giving people their tax dollars back doesn't create growth unless they use it as a down payment on a house or new car. The government has a negative budget and is actually borrowing money to give money back. Perhaps a booming economy will protect the banks from getting worse in the short term since the banks will be hurt even more if people max out their credit cards and can't pay them back but, $800.00 on a $25,000 CC bill only postpones the future due date of repayment.

Going to Walmart and buying Chinese stuff, paying down the credit card, or going out to eat will not replace the people displaced in the housing industry, builders, sales, building supplies and contractors... they make up 15% of the economy and $800 is 1%.

If congress wants to give out tax rebates I would say everyone working should get a proportional rebate because Social Security and Medicare are TAX, these taxes are treated no differently by congress than income tax, highway tax, whiskey tax, tobacco tax and so on... all goes into the same drawer and is spent and then the drawer is refilled with money borrowed to pay SS/medicare and fund government.

[red states rule]

The facts about who pays taxes, and why tax cuts should go to those who pay ytaxes

http://online.wsj.com/article/SB119786208643933077.html

[red states rule]

and the liberal media wil never give tax cuts the credit they deserve

Tax C-C-C-C ..... Changes: NY Times Won't ID Major Irish Economic Success Factor
By Tom Blumer | January 23, 2008 - 08:41 ET
In an article (HT Jim Taranto at Best of the Web) describing Ireland's emergence as an European Union powerhouse ("Entrepreneurship Takes Off in Ireland"), reporter James Flanigan of the New York Times simply could not bring himself to specifically identify one of the main reasons for the country's success (bolds are mine):

Ireland is now alive with enthusiasm for entrepreneurs, who seemingly rank just below rock stars in popularity.

..... The relatively new emphasis on entrepreneurs in Ireland is the culmination of nearly four decades of government policies that have lifted the economy from centuries of poverty to modern prosperity.

The change began when Ireland entered the European Union in 1973. In subsequent years, the government rewrote its tax policies to attract foreign investment by American corporations, made all education free through the university level and changed tax rates and used direct equity investment to encourage Irish people to set up their own businesses.

“The change came in the 1990s,” said James Murphy, founder and managing director of Lifes2Good, a marketer of drugstore products for muscle aches, hair loss and other maladies. “Taxes and interest rates came down, and all of a sudden we believed in ourselves.”


So tax rates "changed," eh? And we learn in the next paragraph that "taxes and interest rates came down," as if by some external supernatural force.

Are you noticing a chronic case of word avoidance?

http://newsbusters.org/blogs/tom-blumer/2008/01/23/tax-c-c-c-c-changes-ny-times-wont-id-major-factor-irelands-success

and

http://www.nytimes.com/2008/01/17/business/smallbusiness/17edge.html?_r=2&adxnnl=1&oref=slogin&pagewanted=all&adxnnlx=1201097351-brL35FPnvCnLwgl6/RzEYw

[theHawk]

We don't need tax rebates. What we need are laws that protect our business from unfair trade practices. This is just a dog and pony show put on by the Repubs and Dems.

[Classact]

The facts about who pays taxes, and why tax cuts should go to those who pay ytaxes

http://online.wsj.com/article/SB119786208643933077.html
I don't think giving tax money back will fix the Sub Prime and bank mess.

I'm all for lower taxes and think lower taxes help the economy. This particular economy problem simply has to run its course... it is a bank problem and not a business problem. Banks need savings to use to make loans, hardly no one saves money in banks so where does the bank get the money to loan (that's how they make money... loaning money)? If they grant a credit card to loan money it should be backed up by a person's wealth in their home or some other property... if not the bank is simply gambling that you will re-pay the credit card... and this is where we are, the banks have issued a lot of credit cards, home/auto and business loans. 15% of the economy is at almost standstill and in a service economy that means less people take advantage of service so there is a worry from the banks to gamble with loans that are not backed up with equity.

Back to the tax refund... do the top tax payers need a rebate of $800 to influence the problem we face, well no I don't think people making millions would do anything differently at all with another $800. If you were Bill Gates and you got a check from the feds what would you do with it? Now if it were a permanent tax break then well yes you would raise an eyebrow and decide to build another factory.

So if we agree so far then consider the other 85% of the citizens working or paying tax. People in lower tax brackets will use money to spend or bank right away that could spur spending in the service industry affected by the loss of housing related spending. Look at the taxes of those lower bracket tax payers. They are SS/Medicare and Federal Income Tax and some citizens pay only SS/Medicare, some pay an equal amount of Fed Tax/SS/Medicare and some pay a proportionate small portion to SS/Medicare and a large portion to Fed Tax. All tax is tax and if spurring the economy will occur by returning money that will be spent then simply give a tax break by not collecting tax on all tax payers in the lower 85% of the tax payers. If congress simply made a tax holiday each employer could remove $800 from their employees tax including SS/Medicare and Fed Tax... at the same time allow the employer (they are probably in the top 15%) to not contribute their 50% of SS up to the amount of $400 per employee. Then Congress could amend the tax code lowering tax debt by $800 for the year of each tax category and no one would have to check the mail box looking for a check and everyone working would get a proportionate refund.

If you earn $5,000 a month and you spend $5,300 a month then you are borrowing $300 for every non essential purchase you make. The same is true of the government. The income is the tax and the non essential spending is paid with tax the same as you pay the debt with income. When the government takes less income and spends less it makes more income because all of the income (you keep and spend) is taxed and therefore the governments income is increased.

Edited to add: If people that just pay SS/Medicade get more money they spend it and tax is generated on gas tax, tax on business when the poor spend money in those businesses... business is increased when people spend and as a result they pay more tax on profits at a higher rate than that of the poor SS/medicare tax payer.

The problem here is that everyone spends more on the wrong things like foreign goods and oil.