USA tax rebate

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#35 CraigD

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Posted 31 January 2008 - 05:41 PM

Has anyone seen the new version of the bill?

I’ve not yet seen the House version of the bill (HR 5101). Inconveniently, it’s still showing as not “not yet received by the GPO” at The Library of Congress’s THOMAS site.

My experience at Thomas has previously been good, making it my main go-to site for US Legislative information. What is delaying this publicly well knows bill’s publication, I don’t know.

It looks a lot better imo.

From my perspective, as an over-30 married professional, it looks better, as raising the limit of family income from $130,000 to$300,000/year means I’ll actually get some money from it.

From the perspective of my understand of the technical aspects of an economic stimulus package, however, it looks worse.

The goal of a stimulus bill is, as best I’ve heard it explained, to cause a sharp, short increase in domestic spending, especially on services and retail goods. To do this, you must give money to people who would spend it in this way if they had it, but who don’t have it.

Individuals with incomes from $65,000 to$150,000 and families with incomes from $130,000 to #300,000, in my experience, typically do have it, and will not spend more if given$1,000. Such folk usually have a few $10,000 of Discretionary money, which is not much effected by an additional$1,000. Personally, If I get a $1,000 check, I’ll just save it, resulting in only a slight stimulation of my bank. A better plan would, I think, to be to give more to people making less. For example, my youngest son, a 23 year old with an income around$30,000/year, lives more-or-less month-to-month. Given $500, or$1,000, or $2,000, he’d spend it within a week on retail goods, following the same pattern I’ve witnessed when he received bonuses and tax refunds. I fear that this legislation is being driven by a desire for Congress and the President to increase their popularity, and in the case of some, be faithful to their political ideologies, rather than sound economic analysis. Although higher income people don’t need a “tax rebate”, many of them would be offended if lower income people got them while they did not, perceiving such an act as “welfare”, “Taking from the (successful, hardworking) haves and giving to the (unsuccessful, possibly lazy and/or spendthrifty) have nots”, etc. Reports indicate that the bill will likely extend federal unemployment insurance benefits. Though positive, because a large fraction of people drawing unemployment insurance income have little or no discretionary money, and are thus more likely to increase discretionary spending than the well-employed, many of these people will likely save the money against the possibility that they will not find good employment before their benefits expire. While I see significant social benefit in extending and expanding, unemployment insurance, such action does not, as I understand, much stimulate the economy. Regardless, I as long as the bill doesn’t exclude most lower income people, it should have some positive, economy-stimulating effect. I think it would have more “bang for the buck”, though, if it more accurately delivered money to people who will quickly spend it. #36 C1ay C1ay ¿42? • Administrators • 6488 posts Posted 31 January 2008 - 06:04 PM All the info I can find is what a few Senators claim the plan contains or not. There seems to be no publicly available copy of the plan itself or a roll call the actual Senate Finance Committee vote. I'd sure like a better seat to watch this thing as it moves in the Senate. • Turtle likes this #37 Turtle Turtle Member • Members • 15452 posts Posted 31 January 2008 - 06:21 PM All the info I can find is what a few Senators claim the plan contains or not. There seems to be no publicly available copy of the plan itself or a roll call the actual Senate Finance Committee vote. I'd sure like a better seat to watch this thing as it moves in the Senate. Roger Wilco C-SPAN: Watch LIVE #38 HydrogenBond HydrogenBond Creating • Banned • 3058 posts Posted 31 January 2008 - 08:36 PM The affect or tax rebates versus more taxes is time dependant. In the short term more taxes is better. But since government is not very efficient, the multiplier affect of that money is lower as time goes on. Tax rebates lower the government revenue, in the short term and can affect programs that need this extra money. But in the long terms, since it will go to more efficient use in the private sector, the money grows due to the multiplier affect. If government was made as efficient as the private sector it would be a wash. But this is not the case. For example a public education may cost$10,000 per student in some cities. One can get an equal education at a moderate private school for $5000 per student. The extra cost is extra overhead that really doesn't deliver the needed services very efficiently. This extra cost is sort of four guys standing around the hole while one digs (teacher), instead of two. When the extra money goes into the economy, the two extra guys get another task sifting dirt. The sifted dirt has new value which generates new revenue that wasn't there. When we tax, we take one of the shifters off the line and let him stand around the hole. This is a much better job but it doesn't really help the economy as much since the cost of a hole and shifted dirt both go up. #39 CraigD CraigD Creating • Administrators • 8034 posts Posted 31 January 2008 - 09:30 PM For example a public education may cost$10,000 per student in some cities. One can get an equal education at a moderate private school for $5000 per student. An interesting claim. Although I expect that some extensive and difficult research would be required, it should be possible to convincingly prove or disprove this claim, because the necessary data - public school budgets, private school tuitions, the fraction of graduates entering college, and standardized college entrance scores (eg: SATs and ACTs) - are available (with appropriate privacy controls). HydrogenBond, can you provide some data to prove or disprove your claim? Without objective data, the claim that a private enterprise is, in every domain, of equal or better quality and of greater cost efficiency than a public enterprise – ditch digging analogies notwithstanding - is, in short, ideological dogma – albeit very popular dogma, especially among neo-conservatives. #40 freeztar freeztar Pondering • Members • 8445 posts Posted 31 January 2008 - 10:57 PM The goal of a stimulus bill is, as best I’ve heard it explained, to cause a sharp, short increase in domestic spending, especially on services and retail goods. To do this, you must give money to people who would spend it in this way if they had it, but who don’t have it. Individuals with incomes from$65,000 to $150,000 and families with incomes from$130,000 to #300,000, in my experience, typically do have it, and will not spend more if given $1,000. Such folk usually have a few$10,000 of Discretionary money, which is not much effected by an additional $1,000. Personally, If I get a$1,000 check, I’ll just save it, resulting in only a slight stimulation of my bank.

That "slight stimulation" multiplied by x could be a considerable amount. Of course, that raises the question of why doesn't the government just bail the banks out, which obviously raises other concerns.

A better plan would, I think, to be to give more to people making less. For example, my youngest son, a 23 year old with an income around $30,000/year, lives more-or-less month-to-month. Given$500, or $1,000, or$2,000, he’d spend it within a week on retail goods, following the same pattern I’ve witnessed when he received bonuses and tax refunds.

I agree with "more to people making less".

I fear that this legislation is being driven by a desire for Congress and the President to increase their popularity, and in the case of some, be faithful to their political ideologies, rather than sound economic analysis.

It is ironic that the last time a tax rebate was offered was right after Bush took office (a different Congress then). I sincerely hope your fear turns out to be unfounded, Craig.

Although higher income people don’t need a “tax rebate”, many of them would be offended if lower income people got them while they did not, perceiving such an act as “welfare”, “Taking from the (successful, hardworking) haves and giving to the (unsuccessful, possibly lazy and/or spendthrifty) have nots”, etc.

Indeed. My argument to my brother was that lower income people are more likely to employ discretionary spending with the rebate more quickly than higher income people, which would most probably save the money rather than spend it right away, in my experience. His argument is that it is the financial industry that is hurting right now and it's those entities that need the money most (he's a financial advisor at a major US firm).

From this page, we know the HHS poverty guidelines demarcate a four person household poverty level at $24,800 (for the contiguous states). This wiki on poverty in the US states that 12% of the US population lives below the federally defined poverty level. According to the US Census Bureau, the US population is currently 303,331,415 people. Twelve percent of the current US population yields approximately 36,399,769 Americans (Hawaii and Alaska included). If all of these people receive a$300 check and spend all of it through discretionary spending, then the total input into the market is $10,919,930,700. Of course, this is unrealistic. Yet, even a third of that total seems significant. I wonder how many people are going to use that money to pay off their elevated mortgage payments? Will that only delay the cascades of foreclosures for a month? Reports indicate that the bill will likely extend federal unemployment insurance benefits. Though positive, because a large fraction of people drawing unemployment insurance income have little or no discretionary money, and are thus more likely to increase discretionary spending than the well-employed, many of these people will likely save the money against the possibility that they will not find good employment before their benefits expire. That is a very good point Craig. One can only hope that unemployed people will make the best decision for their own well being, first and foremost. While I see significant social benefit in extending and expanding, unemployment insurance, such action does not, as I understand, much stimulate the economy. I've never looked at the data, so I really don't know on this subject. Regardless, as long as the bill doesn’t exclude most lower income people, it should have some positive, economy-stimulating effect. I think it would have more “bang for the buck”, though, if it more accurately delivered money to people who will quickly spend it. How would "accurately delivered money to people who will quickly spend it" be determined? #41 Cedars Cedars Creating • Members • 1810 posts Posted 01 February 2008 - 05:22 AM That "slight stimulation" multiplied by x could be a considerable amount. Of course, that raises the question of why doesn't the government just bail the banks out, which obviously raises other concerns. It is ironic that the last time a tax rebate was offered was right after Bush took office (a different Congress then). I sincerely hope your fear turns out to be unfounded, Craig. Indeed. My argument to my brother was that lower income people are more likely to employ discretionary spending with the rebate more quickly than higher income people, which would most probably save the money rather than spend it right away, in my experience. His argument is that it is the financial industry that is hurting right now and it's those entities that need the money most (he's a financial advisor at a major US firm). I wonder how many people are going to use that money to pay off their elevated mortgage payments? Will that only delay the cascades of foreclosures for a month? I for one, am tired of bail-outs. Bail outs for airlines. Bail outs for sports teams (via tax payer funded stadiums). This smacks of the S & L scandal and I have grown tired of the poor rich guys needing all this government help to compete, or worse yet compensate for their mistakes. It was a b.s. economic 'boom' and the reality is coming home to roost so to speak. Added Link on edit: FBI probes 14 companies in subprime mess - Mortgage mess - MSNBC.com And another (love the immunity): Report: Subprime probe gets cooperation - Mortgage mess - MSNBC.com Could you ask your brother, if this rebate doesnt happen, will he still have a job? #42 Michaelangelica Michaelangelica Creating • Members • 7797 posts Posted 05 February 2008 - 07:13 PM The New York Times Tuesday, February 5, 2008 -- 4:08 PM ET ----- Dow Closes Down 2.93% on Recession Fears The Dow Jones industrials plummeted 2.93 percent and other indexes also fell sharply, on fresh signs that the United States economy may be in the early stages of a recession. The Dow closed with a loss of 370.03 points at 12,265.13 in preliminary figures. A sharp decline in European markets and news statistics showing a steep falloff in the service sector prompted the selling. Read More: The New York Times - Breaking News, World News & Multimedia Strange but true Our Reserve Bank has been putting UP interest rates. Now 12 times in a row -another 1/4% yesterday. For the first time Retail Banks also put up rates independent of the Reserve Bank- 0.2%. They say this was due to the tightening of money due to the USA sub-prime crisis. Most banks here were not involved although one or two companies ( a large Shopping Mall owner has been unable to refinance and is in trouble.) The effects of this?- an "un-sub prime" crisis as people with mortgages (most Ozzzies) can no longer pay them. Defaults are starting. The Reserve Bank is a law unto itself and wants to rein in inflation . Yet it is not working! Retail sales continue to just go up and up (We love new technology and plasma TV screens). The increases in interest rate seems to have encouraged rather than slowed buying.! Credit card balances and household debt are up. The Federal Government, despite pre-election spending promises, is reining in spending-the opposite of the USA! The stock market is in "Yo Yo" mode, mostly heading south-with some of the biggest drops in history. Yet all the fundamentals seem to be OK. No big sub-prime losses. Plenty of demand for our resources from China. There are some capacity constraints (Employers are complaining about not being able to get workers yet unemployment is still around 5% and higher with young people) So does fiscal policy work? Why the two diametrically different approaches -USA and Oz? Do economic models work? Is it all down to mob psychology now? Any thoughts on these questions? #43 DFINITLYDISTRUBD DFINITLYDISTRUBD tsilcycrotom live • Members • 2291 posts Posted 05 February 2008 - 07:45 PM Because the idots that run our country are looking for the best way to serve themselves and their fat-cat buddies rather than what would best serve the masses. #44 freeztar freeztar Pondering • Members • 8445 posts Posted 05 February 2008 - 08:30 PM Could you ask your brother, if this rebate doesnt happen, will he still have a job? Here's what he said to this question and your post in general: I like Cedars last post. I completely agree. Bailouts are a cop out. He is incorrect though in his next statement. The most recent bailouts have helped the poor/middle class. The recent "bailout" has been lowering interest rates to prevent alot of lenders from going under. It also has protected people who bought property when they shouldnt have. Mainly, it helped the asset speculators which I was not happy about. That's what investing is about. And in response to his comment will he still have a job? Lets hope so :-). No I am just kidding. Things are actually great for me right now. When times are bad people are looking to leave their old advisor so I have been able to get a lot of new business. Market is at lows and I have been able to buy some great stuff out there at discounts. People always talk about buying low and selling high but when the market is low nobody wants to buy??? Everybody's scared. Its the damnedest thing. Oh well. #45 Michaelangelica Michaelangelica Creating • Members • 7797 posts Posted 15 February 2008 - 07:30 PM Dollar Sales by Japanese Investors Reach Record High (Update1) By Kosuke Goto http://www.bloomberg...id=ivlYPyTOQvkw (Do you have dollar coins now in the USA?) Feb. 15 (Bloomberg) -- Dollar sales by Japanese individual investors on the Tokyo Financial Exchange Inc. rose to a record high on speculation the U.S. economy will suffer a recession. Housewives, pensioners and businessmen accelerated sales of the U.S. currency this week, taking advantage of its rally to a one-month high against the yen. The exchanges share of so-called margin trading, borrowing money to buy and sell currencies, was 8.6 percent in 2007 based on figures from the Financial Futures Association of Japan. They do not seem to believe in the U.S. economic recovery later this year at all,'' said Yuji Kameoka, a senior economist and currency analyst at Daiwa Institute of Research, a unit of Japan's second-largest brokerage. They are expecting the dollar will head south.'' Bloomberg.com: Japan Some of the sub-prime fallout in Oz Centro Wins Two-Month Extension From Banks to Repay$3.5 Billion in Debt Centro Properties Group, the Australian owner of more than 700 U.S. malls, persuaded banks to give the company an extra two months to refinance A$3.9 billion ($3.5 billion) of debt while it works to sell assets.

U.S., Australia Agree to End Flight Restrictions Between the Two Countries The U.S. and Australia agreed to end restrictions on flights between the two countries, allowing more carriers to start services.

Australia Will Raise Benchmark Interest Rate Twice by June, Survey Shows Australia's central bank will raise borrowing costs in March and again by June to cool the fastest inflation in 16 years, according to economists.

Bloomberg.com: Australia & New Zealand

I don't understand why we are raising interest rates while the USA is lowering them
Any suggestions ideas?

#46 InfiniteNow

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Posted 15 February 2008 - 07:55 PM

I don't understand why we are raising interest rates while the USA is lowering them
Any suggestions ideas?

I know you've asked this question before, and I didn't know the answer when I read it the first time, but I've been thinking about it since.

I still don't "know" the answer, but I'll speculate.

Those in control of your local finances and economics see some benefit in preventing your people from borrowing more. Higher interest rates mean less borrowing. It could be something as simple as them not wanting the Aussies to be in greater debt, or it could be something more nefarious like trying to keep people homeless.

I really don't know. Either way, higher interest rates means less borrowing... so maybe start there.

#47 Michaelangelica

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Posted 15 February 2008 - 08:06 PM

Those in control of your local finances and economics see some benefit in preventing your people from borrowing more. Higher interest rates mean less borrowing. It could be something as simple as them not wanting the Aussies to be in greater debt, or it could be something more nefarious like trying to keep people homeless.

I really don't know. Either way, higher interest rates means less borrowing... so maybe start there.

i am sure they want to slow spending but it is not working.
Big retailers are reporting "bumper" years and profits.
All the interest rates will do is hurt young people with big mortgages and maxed out credit cards. These days a million or two for a mortgage is not uncommon, \$500,000 about average/median (?)
So an Australian sub-prime crisis looming?- in totally reverse reasons/conditions to you-here we come??

At least air flights to USA will be cheaper soon.
You guys in USA better buy some hedge currency while you have a chance if you are going to travel any time soon.?

#48 InfiniteNow

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Posted 15 February 2008 - 08:59 PM

Okay, I'm about to show my ignorance, but WTF is hedge currency?

#49 Turtle

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Posted 15 February 2008 - 09:32 PM

...
His argument was that gov't should not be giving money to people who do not pay income tax. If we do that, the economy will not grow as much.
...
People who are poor, in general, love to spend money (hence they're poor).

People who don't pay income tax are not getting any money for one , and for another, do you really believe your accusation of the poor? I live 20% below the poverty threshold* on a fixed income, and I'll tell you it's pretty hard to spend money I don't have, let alone what I aint gettin'.

God forbid any of ya'll ever get sick or old, because your bank will be the first to freeze your account and take your money for the slightest debt or late payment. If it weren't for finding a situation to share housing with others I'd be on the street because I can't afford it on my own. I spent 5 years on a waiting list to get subsidized housing, and when I came to the top I was rejected not because I wasn't eligible by income, but because I didn't notify them of a new roommate.

I'm so sick of the current administration & Congress that if I had enough food in my belly I'd puke.

*Frequently Asked Questions about Poverty

#50 InfiniteNow

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Posted 15 February 2008 - 10:10 PM

Turtle, while we don't necessarily get along, you're one of the brightest guys I've had the opportunity to encounter. Why are you on a fixed income?

#51 DougF

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Posted 15 February 2008 - 10:53 PM

Well I'm sure you know the Feds been drooping the interest rates, but did you know the banks have raised there rates. it seems they are trying to re-coop some of there losses from the housing market.

Consumer Banking
Card Sharks

Bank of America told thousands of its cardholders in recent weeks--even those with good payment histories--that they faced a rate hike from 9% to as high as 28% if they didn't pay off their balances at the old rate and stop using their cards. The bank, the largest credit card issuer, since its 2006 acquisition of MBNA, says it's all part of its "periodic" review of customer credit risk.

where will it end (or will it) everything is going up Housing, gas, food the only thing that is NOT increasing is my paycheck,