I’ve been getting so many questions about the government stimulus package (aka “the rebates”).
First off, yes, this is
free money you’ll be receiving this summer; it’s not
a pre-payment on next year’s refund.
Most Americans who qualify for the rebates only need to file their 2007 income tax returns to receive their check or direct deposit. This includes people who don’t normally file, such as those on Social Security without other income and some veterans. Continue reading below for more details if you fall into either category.
People often ask me where the government is getting the $150 billion they’re going to disburse as part of the package. Last time the feds offered a similar rebate, they just advanced you your own money. This time, however, they’re borrowing $150 billion to make it available to you.
I want you to know that I am not a fan of this idea. Consider this: States are constitutionally bound to balance their budgets each year. They can either raise taxes or cut spending if they come up short. But the federal government has no such oversight and they own the printing presses that make the money. So if they need extra money, they just print more!
In a way, that’s exactly what they’re doing here. The feds will essentially “borrow” the money from people via treasuries, which are like CDs for large corporations and the rich. They’ll issue $150 billion more in treasuries, and then sell them to wealthy people and institutions around the world.
Critics have said that it’s nice of your grandkids to pay for you getting a check this summer — which isn’t too far off from the truth. Bonds and treasuries are paid back over 30 years, so it really is the next generation that gets stuck paying for the stimulus package.
I think this economic stimulus package should be known as The Politician Protection Act of 2008. The purpose of this rebate money is so that politicians can get re-elected this fall; it’s not about stimulating the economy. Sure, people will be excited about the rebate, but the reality is it won’t address the real problem. In the long run, we’d be better off with lower tax rates and a simpler tax code than having the feds send out freebies.
Politicians want you to take your check, get that endorphin high from blowing it and then vote them back into office. But I want you to pay down your debt with it!
For those who receive Social Security benefits and certain veterans’ benefits, please note that you must file a 2007 tax return this year to receive your refund. Remember that you can get free tax prep assistance online and at local clinics across the country.
One caveat: In a recent scam alert
, I warned you that crooks have been calling people up and pretending to be from the IRS. They ask for personal banking info and claim you won’t receive the rebate until they confirm your checking account number. The IRS would never
call you to verify your account info, so don’t fall for this baloney.
Find out how much of a rebate you will get:
Married With Children
Married, No Children
Single With Children
Single, No Children