The Cellar - View Single Post - Before you spend your tax-relief check from the IRS...

vsp · 07-24-2001, 03:51 PM

Well, there's a basic truth here that bears repeating: not all taxes are bad, not all government programs are wastes of money, and not all political decisions are made specifically to screw the little people. (The charges are accurate in some cases, but some would have you believe that every tax dollar the government receives is a criminal violation of our human rights and that the IRS should be bombed from orbit. Some would also have you believe in Black Helicopters and Tin Foil Anti-Mind-Control-Ray Hats.)

This "rebate" doesn't do much of anything, besides distributing tax refunds to taxpayers many months ahead of time. The ideal tax return should end up as a zero-sum; you don't owe anything, and you don't get a big refund that's essentially an interest-free loan to the government for months. They should be drawing the appropriate amount from each paycheck all along.

So, let's assume that I'm a zero-sum taxpayer, shall we? I make over $6K per year, so I'd normally pay $900 on the first $6K in taxes. Under this "rebate", I'm treated as if I'd now be paying $600 in taxes and receive a $300 check in the mail. So far, so good.

However, in April, I'm taxed at the _actual_ 15% for that $6K. (As the article states, this advance-refund policy is "in LIEU of" actually reducing the $6K rate to 10% this year.) Therefore, I owe the full $900 after all, and my balance due will be zero MINUS that $300 credit, so that I'll now OWE the government that $300.

It all comes out to zero, and I had the opportunity to use that $300 and gain, oh, maybe a buck or two in interest over that time. But a whole lot of people are going to be surprised in April when they find out that for all practical purposes, this isn't a refund we're getting, it's a LOAN, albeit an interest-free one.

Now, as far as the tax cuts affecting your income OVER the first $6,000, that's a different issue entirely and is best taken up with your accountants.

So let me get this straight. Bush is doing all of this so he can say "Look! I'm stimulating the economy! Here, have some money!" What happens in a year's time, when Americans' refund checks (which many people depend upon) are all $300 lower than usual, and half of them spent their advanced-refund checks thinking they were some kind of bonus or rebate?

jeff. long-winded, as usual

07-24-2001, 03:51 PM	#6
vsp Syndrome of a Down Join Date: Jun 2001 Location: West Chester Posts: 1,367	Well, there's a basic truth here that bears repeating: not all taxes are bad, not all government programs are wastes of money, and not all political decisions are made specifically to screw the little people. (The charges are accurate in some cases, but some would have you believe that every tax dollar the government receives is a criminal violation of our human rights and that the IRS should be bombed from orbit. Some would also have you believe in Black Helicopters and Tin Foil Anti-Mind-Control-Ray Hats.) This "rebate" doesn't do much of anything, besides distributing tax refunds to taxpayers many months ahead of time. The ideal tax return should end up as a zero-sum; you don't owe anything, and you don't get a big refund that's essentially an interest-free loan to the government for months. They should be drawing the appropriate amount from each paycheck all along. So, let's assume that I'm a zero-sum taxpayer, shall we? I make over $6K per year, so I'd normally pay $900 on the first $6K in taxes. Under this "rebate", I'm treated as if I'd now be paying $600 in taxes and receive a $300 check in the mail. So far, so good. However, in April, I'm taxed at the _actual_ 15% for that $6K. (As the article states, this advance-refund policy is "in LIEU of" actually reducing the $6K rate to 10% this year.) Therefore, I owe the full $900 after all, and my balance due will be zero MINUS that $300 credit, so that I'll now OWE the government that $300. It all comes out to zero, and I had the opportunity to use that $300 and gain, oh, maybe a buck or two in interest over that time. But a whole lot of people are going to be surprised in April when they find out that for all practical purposes, this isn't a refund we're getting, it's a LOAN, albeit an interest-free one. Now, as far as the tax cuts affecting your income OVER the first $6,000, that's a different issue entirely and is best taken up with your accountants. So let me get this straight. Bush is doing all of this so he can say "Look! I'm stimulating the economy! Here, have some money!" What happens in a year's time, when Americans' refund checks (which many people depend upon) are all $300 lower than usual, and half of them spent their advanced-refund checks thinking they were some kind of bonus or rebate? jeff. long-winded, as usual