2008 Economy Stimulus Package

The stimulus package has passed the Congress and has received President Bush's signature. It is estimated that $120 billion will be put in the hand of taxpayers with income below $75,000 for individuals -$600, $150,000 for couples-$1200, per child $300. For those seniors who did not file a tax return but have an income of $3000 or more (including social security, railroad retirement and certain veteran's benefits) $300. The later being dependent on how well the IRS Social Security, Railroad Retirement and Veteran Administration share information.

This tax rebate minus administrative overhead, fraud, and complexity will put about half of the $120 billion into the economy. The rest will be used to pay of personal debt. An additional $50 billion will be used to give incentives for business to purchase equipment.

The Laffer Curve shows what happens when taxes are to high, revenue declines. The politicians do not want to cut tax rates because they say it would reduce tax revenue and would take away some of their power. If this is a tax rebate being used to be an economy stimulus, would this not be the same as a tax rate reduction leaving money in the pockets of tax payers to stimulate the economy?

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