Fix the Tax Code Friday: Advanced Tax Credits

2008 January 11

by Kelly

It’s Fix the Tax Code Friday!

Amid rumors of a recession, there are whispers about bringing back the advanced tax credit a la 2001. Remember when taxpayers received those checks in the mail for a hundred dollars before the end of the year? Why not do it again? The thinking is that it might stimulate the economy.

So what do you think? Today’s Fix the Tax Code Friday question is:

Would you favor a tax “rebate” or advanced credit for 2008?

Technorati Tags:
tax, income tax

No Comments leave one →

2008 January 11

Wayne PHILLIPS

Remember folks, nothing is free! Tax rebate, tax credit, doesn’t matter, it goes against the national debt. It may be a quick fix to the government’s fiscal program to continue to look good for the current administration, but isn’t this a bailout for mortage lenders? How many of those mortage lenders MANAGEMENT are still drawing hefty salaries and received bonuses fortrying to fix their companies problems, when their industry “hurt”, if not stopped the long experienced growth. Free enterprise is great, as long as it doesn’t affect groups who are not participates. Burn your house down, fine; but do not burn the neighbors shrubbery or his house. That is not acceptable. Need to ask that neighbor to move, with legal authority if necessary. Same goes for the mortage industry, they apparently need some help cleaning up their industry. Remember about a year ago it was Freddie Mac and Fammie Mae. And they rewarded the management for the problems they created. The savings and loan fiasco some years ago was similar. Wall Street execs and firms in the last two years. Something is wrong in the country when corruption and excessive mismanagement is rewarded. Apparently some of America’s top management have an excessive “greed gene” in their DNA. Where are the CEO’s / COO’s who want to leave a legacy in a company excelling and better off? To me that is a greater reward than taking all the money at other folks expense.
Not exactly a response to the tax question, but proposing a fix in this way, does not solve the deeper problem.
…rwp

2008 January 11

Robert D Flach

Please, please, please do not bring back the “Advanced Tax Credit” – the tax rebate checks that caused such agita and expense back in the summer and fall of 2001 - and during the following tax filing season!

These checks were advances on your 2001 Form 1040 tax refund, based on your 2000 income and filing status. The checks were for up to $300.00 for singles, $600.00 for married couples, and $500.00 for heads of household.

I remember blogging about the disasters resulting from these advance rebate checks at the time. In a January 2003 post I said “The rebate checks sent out in the fall of 2001 cost the IRS a fortune, caused all kinds of confusion, resulted in millions of errors on 2001 tax returns, and did nothing to stimulate the economy.”

The only advantage that an advance rebate check can provide is to generate good press for the party that votes for them. When a member of the “great unwashed masses” gets an unexpected check in the mail from the government he will think, “Look what the Republicans gave me!” And you can be sure the Republicans will continuously remind him/her of that fact.

So I hope that the Congress will “just say no” to new advance rebate checks.

TWTP

2008 January 11

Kelly

Dad (Wayne), I agree with you re the bailouts and such. It’s appalling. Same thing is happening in PA - the folks who run the government student loan program were found to have made inappropriate trips, etc., and surprise, they got a raise.

The idea with this tax credit is to put money in the hands of folks who will, ostensibly, use it to stimulate the national economy. Only, it tends not to work that way.

I believe it to be a “quick fix” to switch the debate from what’s going wrong to spend, spend, spend.

2008 January 11

Kelly

Robert, you are correct. I remember doing returns that year for the IRS’ VITA program and it was nightmarish. No one could remember if they received a check or not, or how much it was. We had to call that toll free number that the IRS set up to verify whether or not you received a check, but it was constantly busy. It was awful.

Great pr, sure. But how much money was spent trying to figure it out after the fact?