Barack Obama may not yet be in office but his economic team is already plugging away at an economic stimulus package. According to Vice President Elect Joe Biden, the package will include investments in health care, energy, education and infrastructure.
The stimulus package has been touted as providing relief for the jobless and the middle class, though details have been vague so far. Part of that relief may include a tax credit. Obama had suggested during his campaign that he would be in favor of a tax credit for the employed of $1,000 for working married couples or $500 for working singles. There is no indication that those numbers are still in play – or even that the credit will be part of the final stimulus package.
What will likely be in included in the package (as previously noted on the blog) are increased unemployment benefits, higher food-stamp payments and aid to states to subsidize Medicaid costs, a growing concern as more people lose their health insurance due to layoffs or increased costs.
What is missing from the continued talks about the stimulus package is any mention of an additional rebate check, something that many taxpayers were hopeful would be included. A version of the proposed tax credit might offer a higher refund or decreased tax bill for some taxpayers if implemented in early 2009. But the implementation is a big “if” so far. As the cost of the stimulus package grows (it’s estimated to be at least $800 billion so far), lawmakers are likely to pull back rather than add on to the plan.
Bottom line: Don’t count on receiving an additional check. There’s still no plan for a second stimulus check at this time. I’ll keep you posted as talks on the plan progress.
Like many other states, Mississippi is feeling the squeeze of a downturn in the economy. In particular, the state is reporting a $90 million shortfall in Medicaid funding. Medicaid in Mississippi serves about 600,000 people. Mississippi, which ranks among the poorest states in the country approved the deepest cut in Medicaid eligibility for senior citizens and the disabled than in any other state – all under Governor Haley Barbour in 2004. The maximum income allowed for an individual to receive Medicaid in Mississippi was reduced from $12,569 per year to $6,768 (yes, four figures – not a typo). Despite the dramatic and controversial cuts, the state still faces challenges in funding.
Apparently, the state had been using Hurricane Katrina money to make up the deficit (no, I don’t get how that works – I thought that Katrina money should be used for, oh, say, Katrina victims, but who am I to say?) but has run out of money.
Their solution?
A tobacco tax, a hospital tax or some combination of the two.
The House of Representatives favors a tobacco tax. The proposal would raise the current tax of 18 cents to almost $1. Estimates are that this tax would generate about $150 million in revenue – more than the current hole. This would make sense from a budgetary perspective – especially since Mississippi ranks near the bottom of all states in cigarette taxes.
Nonetheless, the Senate favors a hospital tax. The tax would add $167 per day as a “bed tax” on state hospitals. The Mississippi Hospital Association helped craft the hospital tax, though they reportedly prefer the tobacco tax. Hospitals worry about the increased cost of care and what that might mean for patients – especially those with insurance. Ironically, those with private insurance are likely to be hit hardest if insurers balk at the tax or if the insureds have high deductibles or other restrictions. To be fair, though, newspapers in Mississippi are reporting that the Public Health Committee Chair Hob Bryant claims that the tax would not result in higher insurance premiums – how he can make such a statement is not clear. The idea of taxing those who pay for care to benefit those that do not is not likely to be popular.
Lt. Gov. Phil Bryant (I’m assuming no relation to Hob) is opposed to an increase in the tobacco tax, claiming that it would be unconstitutional to pass such a tax since the agenda for special session called by Gov. Barbour was limited to the hospital tax. Why favor a hospital tax over a tobacco tax? Hmm, I don’t know. But it is, of course, worth noting Gov. Barbour’s prior job before he was elected to office: he made millions as a lobbyist for the tobacco industry. Just saying.
Taxpayer asks:Would my Mother who is on Medicaid and in a nursing home – be eligible for the stimulus payment? The money would be deposited into her checking account to help by for “extra” things for her at the nursing home.
She doesn’t file because the only source of income is SS – 14,300.00. Out of which, we pay the nursing home $10,800 a year and AARP 167.00 every month.
I was just wondering would she be eligible for the Tax Rebate since she is on Medicaid at the nursing home. Thanks for answering me back.
Taxgirl says:
Thanks for the question.
First, your mother (and any other taxpayer) must file in order to receive a rebate. Those taxpayers who do not file will not receive a rebate. So, if she doesn’t normally file and she wishes to receive a rebate, she must file for 2007.
Second, Social Security recipients are eligible for the tax rebates.
So, I am guessing that, under these facts, your mother would receive a rebate so long as she files.
The bigger issue is whether she would be entitled to keep the rebate from the nursing home. Medicaid recipients have income limits and resource limits; even though it’s a federal program, liability and regulations may vary by state. You may wish to check with social services if you have questions.
For more information on tax rebate eligibility, check out my prior post.
Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.
Have a question? Ask the Taxgirl!
