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conspiracy theory

Money for Nothing and Your Checks For Free: Is There Something More to Tax Rebates?

by Kelly on February 24, 2008 · 18 comments

in individual, tax policy

conspiracytheory.jpg

It sounds almost too good to be true, no? Just for filing a tax return, our government will hand over a check to you. It is, after all, merely a means of getting money into the hands of everyday Americans to stimulate the economy. Right?

I received an email over the weekend with one simple question, “Why do you have to file your 2007 tax return before you can receive a rebate check?”

My initial response was that it was the most simple method of determining eligibility. But then I thought about it a little bit longer. There are other ways of determining eligibility - and why not use the 2006 tax season? And just like that, my mind kicked into high Mel Gibson-Conspiracy Theory mode.

Is it possible that the filing requirement is actually meant to “encourage” more taxpayers to file?

Could it be that the lure of “free money” will be enough to encourage regular non-filers to file - and possibly pay?

Instead of raising taxes in an election year, could it be contemplated that filing incentives will actually raise revenues?

Hmm.

For the record, I don’t believe that Congress puts all that much thought into the best method to lure taxpayers into filing tax returns… But it is an interesting thought.

Here are some statistics to chew on:

  • Each year an estimated 9 million taxpayers who are required to file a federal income tax return fail to do so - the resulting undereported and unpaid tax is approximately $24.3 billion.
  • The federal tax gap, which is the difference between the amount of tax owed and the amount actually collected, is nearly $300 billion each year.
  • The Tax Foundation estimated that, of the 136 million tax returns filed in 2006, 43.4 million tax returns had a zero or negative tax liability.
  • 15 million households filed no tax return at all in 2006.
  • The Tax Foundation reports that the total of the nonfilers and those that paid nothing comprise 41% of the US population.
  • 20 million seniors are eligible for rebate checks this year. However, each year, 12 million seniors do not file tax returns.
  • Taxpayers who have an outstanding tax liability from prior years will not be eligible for a full refund.

    So what does any of that mean? Maybe nothing. Or maybe it means that there are a lot of taxpayers who normally either don’t have to file or willfully choose not to file - and this year, there’s an incentive to file and pay.

    Could it be an elaborate plot to see who is not filing? Is it a way of updating the records in the ol’ IRS database? Is it a strategy to have more on time payments in 2008? Is there something more to it than merely getting some free money?

    I don’t know. But I will say this: I’m already hearing flurries of “should I file this year?” No doubt, some of these are from folks who have willfully chosen not to file in years past and now see a big fat check being waved in front of their faces.

    The whole thing reminds me of the episode of the Simpsons (Lisa the Skeptic) where the police lure Homer to the station to arrest him for 235 unpaid parking tickets.

    Chief Wiggum has Homer arrested and says: I hope you brought your checkbook, wiseguy.
    Homer replies: You lousy cops. Lucky for you, I’m double-parked, or I’d… (writes a check)
    Homer continues: There. Now, could I please have my motorboat?

    Are the rebate checks the equivalent of Homer’s motorboat?

    { 18 comments }