So Is Everyone Excited About the Rebate Checks?

Everyone seems to be really excited to get their tax rebate checks from the government in the next couple months. The goal of the economic stimulus package is for consumers to spend this money on goods and services to stimulate the economy in the short term. Part of me wants to believe that this is a good thing and that this will benefit all involved. We could look at this as a tax rebate on the high taxes that we currently pay to the federal government. However, could there be some negative effects that overshadow the money itself?

Let us not forget that studies typically show that tax rebates have minimal effects on the economy. Current surveys show that many people plan to pay down their debts as opposed to spending it on consumer products. In times of economic uncertainty, it is always good to have little or no debt. Contrary to what the news media will say in this political year, we are not in a recession. There has been a slowdown in growth, but not recession. I will take the check gladly and view it as a refund of taxes I have paid. But should we stand back and think about a few things before being all giddy about getting some money from Uncle Sam?

Whenever the government gives money to someone, it took the cash from someone else. The government has no income. It merely collects and spends. In spite of this, have we come to the point that we actually believe that the government should bail us out every time there seems to be economic trouble? The housing crisis is not affecting people who did things the right way. The majority of homeowners who are being foreclosed on are those who should have never signed up for the loans in the first place. They agreed to take on adjustable rates and subprime terms that they should have never been able to get. I feel that people of the younger generation feel they have to get in their first years what their parents may have taken a lifetime to accumulate. The current economic instability is a result of lenders and borrowers going way over the edge. You can only buy on credit for so long. People who have minimal or no debt are not feeling the pinch at this time. We have been fed the ridiculous idea that we should leverage ourselves up to the eyeballs in debt to get ahead. In slower times, the house of cards comes crashing down. Let me give one example: Just imagine for a moment if you saved up money and paid cash for your car. Instead of trading in your car all the time and often being upside down, what if you just paid for it? The most recent statistic I have seen states that the average car payment in America averages $464.00 a month. If you invested that payment every month through a normal working lifetime of age 25-65, you would retire with $5.4 million dollars. Hope you like your car!

It was amazing to me to watch how quickly politicians from both sides of the aisle lining up to hand out these checks to taxpayers with very little wrangling. It seemed to be an admission that money in the hands of people is always better than in the hands of the government. Then they decided that families earning over $150,000 should not get a rebate. Before you get all puffed up and say, “Those people don’t need the money,” think about this for a moment: We train our kids from a young age that they need to go to college and work as hard as they can to become successful. If they work hard and achieve the goal of a high income, then they will be labeled as one of “those evil rich people.” They will get to pay the majority of income taxes while the “working poor” get their money in the form of rebates and earned income tax credits. In 2002, the bottom 50% of income earners only paid 3.6% of the overall tax load. Are we as a society slowly justifying the socialist concept of income redistribution?

Most voters are too ignorant to actually realize what they pay in taxes. Next time you get paid, look at your pay stub and see how much is being withheld. Who actually looks? We just look at the net pay and could care less how much is taken out anyway. Instead of being pacified, why don’t we become energized? Putting aside any dislikes of President Bush, you have to realize that he implemented some of the most sweeping tax seen in quite some time. Hillary Clinton and Barack Obama have both vowed to let these tax cuts expire. They say that we would only be “rolling back” tax cuts on the rich. According to studies done by the Heritage Foundation, the hard facts may make you cringe. What you are not told is that the death tax would increase taxes by an estimated $91 billion. Over 100 million taxpayers will be hit with an average hike of $1,716. The marriage penalty would come back and cause over 44 million married couples to pay an average of $1,480 more. 17 million seniors would have an average tax increase of $2,034. Let’s start holding our politicians accountable and put money back in the pockets of those who will best help the economy the most—the American taxpayer.

Marvin

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