Starting in May, the Treasury will begin sending economic stimulus payments – better known as tax rebates – to more than 130 million households. The stimulus payments will go out through the late spring and summer. The IRS will use the 2007 tax return to determine eligibility and calculate the basic amount of the payment. In most cases, the payment will equal the amount of tax liability on the return with a maximum amount of $600 for individuals ($1,200 for taxpayers who file a joint return) and a minimum of $300 for individuals ($600 for taxpayers who file a joint return).
The rebate issue is truly a joke. The checks won’t be mailed until May or June, so any instant lift to the economy has to wait until then. That will make another 5 months from the earlier warnings of an economic downturn. In addition to the tardiness of the rebate checks, it will cost $42,000,000 to mail an explanatory letter to the 130 million households before the checks are actually sent.
Keith Hennessey, director of the president’s National Economic Council, said the letters are being sent to explain the workings of the rebate. He explained the necessity for the letter this way:
“Any time you do something as a government tens of millions of times, there is ample room for people to get confused. And so if you’re going to have tens of millions of taxpayers getting checks, you want to get the information out so that you have as few people as possible confused about what’s happening, they understand what’s coming, and it reduces the number of incoming requests that IRS and Treasury have to figure out how to deal with it.”
I don’t know about you, but I think I can pretty well figure out the mechanics of a rebate check without a letter to tell me what’s going on. You get it, and you do something with it. My rebate check will be used to pay bills or perhaps put into my savings account – something that doesn’t seem to happen too much anymore. I won’t be running out to spend it on big ticket items.
But here’s a thought for those in our government who still think an explanation needs to be provided; why not just send the letter along with the check? You go to your mailbox, you pull out the envelope with the dreaded IRS in the upper left-hand corner, and you open it. Surprise, surprise, inside is a nice letter with a check tucked in its folds.
Personally, I think it is too little too late.