I Hate These Things

Yes, I know the economy is in a recession and the government wants to stimulate spending. And I understand that theoretically cutting taxes should do that. But I really hate these showy tax rebates. First, they are political blackmail. Now that the proposal has been covered on every newscast and voters have heard about it, there will be few in Congress who will have the nerve to stand up against the cuts. Next, they cost more to do than a non-rebate tax cut. There are the costs of developing the procedures, the actual costs of cutting the checks, the extra support needed to answer questions and track refunds. This money will come out of the  existing IRS budget which means less to spend on lessening the tax gap. Third, because people only remember what they want to hear, I will have to deal with all the people who don't get a check or the amount they think they should have. And then it will have to be tracked for the 2008 tax return. Finally, there will be people who will get more rebate than they deserve. The rebate will be based on information on the 2007 tax returns. But situations change. 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.
Since our lawmakers think that the tax system should be used to influence the ecomony, tax cuts to stimulate spending are a necessary evil. However, tax rebates are for show and glory and not a good fiscal policy.

Comments

[Robert D Flach]

Trish

I wholeheartedly agree!

The last set of rebate checks cost the IRS a fortune, created tons of confusion, and resulted in millions of errors on 2001 tax returns.

Once again Congress reacts to a problem with a quick fix instead of responding to it by dealing with the causes.

TWTP