Friday, February 22, 2008

Rebate Thoughts

While Congress is attempting to refund some of our tax money this year, the reasons behind the refund do not gel well for what most people need to do with excess money.

Just like when the rebates were offered in 2001, the government's ultimate plan is to stimulate the economy. Their hope is that we will spend the money to buy things that we 'need'. What about the horrendous news that American's have a horrible, in fact negative, savings rate. We spend more than we make! We seem to have forgotten that fact.

The mindset of most Americans that will be receiving a rebate is that the government is ‘giving us money’. The problem with this mindset is found in the fact that this money is really our money that the government decided not to use. The line of thinking is a little different when all of a sudden this is my money instead of a gift. This is not a gift!

While it is not the last problem, another big one I have with the rebates is due to the fact this it is a redistribution of wealth, plain and simple. While many upper-income tax payers will not receive a rebate, many lower-income earners will receive a rebate, even if they did not pay any taxes!

I can argue that the hardest working Americans are taxed unfairly, while those that do not work hard enough to rise above the pack are not taxed their fair share. The upcoming tax rebates simply point out even more so how unfair our current tax system really is.

What will you do with your rebate? Leave your comments below...