Bush's economic stimulus package; What will you get back?
As you’re no doubt aware, President Bush has created an economic stimulus package in the hopes of stalling the impending recession (or if you believe some, depression) that’s on the horizon. It’s not approved yet, but it has already passed its first major hurdle – The House Of Representatives approved the $146 billion dollar deal. Want to know how much you'll get?
The chamber – by an overwhelming majority of 385 to 35 – approved sending tax rebate checks of up to $600 per person and $1,200 per married couple, plus an additional $300 for each child.
The checks could be in the mail as early as May. But what does this mean for you? I mean, that’s some fairly vague information. I hate the words “up to” because if I give you “up to $10” I could in fact give you a dime and not be lying.
I did some digging around the news sites, the BBC, government blogs and so forth and have put together a quick check-list of what you will most likely get back. It’s not concrete as the bill hasn’t been through the entire system yet.
In essence, the stimulus package removes the 10% tax bracket currently in place. Of course, if it were that simple we’d all be a lot happier. There are phase-outs baked into the plan that start deducting from your rebate check. But to be honest, the people that will affect most won’t really care as they’re already earning a very healthy sum of money.
The system works in two stages. First, you figure out just how much you can get back. Then, you calculate the benefit reductions based on salary.
First, let’s see what singles could get back.
$3,000 or less A big fat zero.
$3,000 or more, paid no taxes $300.
$3,000 or more, paid taxes $600.
Have children? $300 per child
Now, the reductions.
It’s fairly simple math. Once you earn over $75,000, your check is reduced by 5% per $1000 above the $75k threshold. After $87k, you get nothing. Here are some rough examples.
Single person earning $50k a year with 2 children = $1200
Single person earning $80k a year with 1 child = $675 ($900 - $225)
Single person earning $90k a year with no children = $0
Couples get the same treatment, only everything is doubled to take into account the two people in the household:
3,000 or less A big fat zero.
$3,000 or more, paid no taxes $600.
$3,000 or more, paid taxes $1200.
Have children? $300 per child
And the reductions.
Once again, simple math. Once couples earn over $150k, the check is reduced by 5% per $1000 above the $150k threshold. After $174k, you get nothing.
I found these further examples, all based on the 2007 filing period.
A couple with no children, with adjusted gross income of $100,000:
$1,200 couples rebate. A $1,200 rebate.
A couple with income of $145,000, with three children:
$1,200 for the couple, plus $300 for each child. A $2,100 rebate.
A couple with income of $160,000 with two children:
$1,200 for the couple plus $300 per child — BUT would go down by 50 percent (5% for every $1000 over the $150 threshold). A $900 rebate.
A couple with income of $200,000 and four children:
Disqualified, income exceeded $174,000. No rebate.
There are other aspects to the bill that I’m not covering here, including mortgage relief. But there is another important message here. The government wants you to SPEND THIS REBATE.
It’s a stimulus package, and thus they want the money to go straight back into the cash registers of businesses far and wide. The problem I see with that is that in a time of record debt and no savings, how fiscally responsible is it of the government to tell us to spend our rebate? Isn’t over-spending the reason we got into this mess anyway? I’m sure economists out there will set me straight.
Still, there you have it. A touch more clarification, I hope it helps.
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