As expected, Bush proposed “tax rebates” to stimulate the economy.
The idea is that if you get money to folks in the lower to middle classes, they will spend it, boosting the economy back up. In most cases, this is not expected to be an extra tax credit – rather an “advance” against your 2008 taxes (which you would actually file in 2009).
Tax professionals hate the idea, for the most part. And the Dow isn’t biting either.
After Bush’s announcement of the plan on Friday, stocks slipped, with the Dow ending at a 10-month low. This followed a big decline on Thursday – more than 300 points. Ironically, stocks made a small bounce on Friday morning but dipped against after investors appeared less than encouraged following the unveiling of the Bush Administration’s proposed fiscal stimulus plan.
Stocks have tumbled so far this year on worries about the threat of recession. Congress will go to work next week on firming up a real stimulus plan to halt a sliding economy. Stay tuned.