What should we really do with a tax rebate check?

Friday, January 25, 2008

Washington is at it again.

Provided the Senate doesn't add something President Bush doesn't like, we can expect tax rebate checks in May.

Worried that the economy may be headed into a recession, House Speaker Nancy Pelosi, Republican leader John Boehner and Treasury Secretary Henry Paulson hammered out a deal that they hope will pump about $150 billion into the economy.

Under the agreement, individual taxpayers would get up to $600 in rebates, working couples $1,200 and $300 per child.

Thanks to the Democrats holding out, an additional 35 million families that make at least $3,000 but don't pay any taxes will get $300 as well.

The payments will be phased out on a sliding scale for those who make from $75,000 to $150,000.

Forget, for now, that Washington is trying to curry our favor using our own money, or that they want us to spend that money to improve an economy they have mismanaged.

What should we really do with the money?

Consider these facts from Bankrate.com:

* Some 40 percent of American families annually spend more than they earn.

* The average American household credit card debt is $8,400 -- $9,205 if it has one or more cards.

* The typical American family today pays about $1,200 annual in credit card interest.

* The typical credit card purchase ends up costing you 112 percent more than if you used cash, and if it's in a fast-food restaurant, you probably spend 50 percent more than you would have with cash.

* The personal savings rate in the United States dropped from 8 percent in the 1980s to under 2 percent since 2000.

* The average personal wealth of a 50-year-old American, including home equity, is less than $40,000.

* One out of every 73 U.S. households filed for bankruptcy in 2003.

What will you do with your rebate check?

If you're like most of us, spending it on a new purchase is the last thing you should do.

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  • Wow! I, for the first time in my life, want to qualify to pay taxes, but only about ten or fifteen dollars, so I can receive $600, instead of $300. Pay ten, receive six hundred. Now there is a deal no one can beat. I do not plan to do that, but I betcha a bunch of Americans will figure out how to, even if it means telling the truth about their income. Ha! I could say some really nasty things about artificially trying to bandage a financial problem, but I won't. I will just think them quietly.

    However, as much I receive, I will donate.

    -- Posted by Navyblue on Fri, Jan 25, 2008, at 3:40 PM
  • Well first of all, this is a rebate for 2007 tax's that's already been filed. So no one can pull anything on this.

    That's why it's called a tax "Rebate". It has nothing to do with 2008 tax's that's not filed yet,think about it - they're cutting the checks in April - way before most people will have their tax's turned in and filed.

    -- Posted by legalinfo on Fri, Jan 25, 2008, at 4:04 PM
  • Ah yes, only in America do you get rewarded for not working and living off from others. If you compute the amount of the rebate as a percentage of your income, what rate of a rebate are the people who don't work getting (an infinite number if you do it merely on the income they earn)? America - Land of the brave, and home of the people who don't work, yet live a better life than the average working man. Obviously, I'm totally against giving more to people on welfare. I know many of them earn cash and don't report a dime. I'm particularly talking about the one who moved here from Colorado because Nebraska offers better welfare. He drives a new truck and sells scrap metal that goes un-reported. Not to mention he is a chain smoker. Our system is broke and a rebate is not the answer.

    -- Posted by blueCollarWorker on Tue, Jan 29, 2008, at 1:14 PM
  • I agree a rebate at this point will do nothing for many of us. I say take all this money and figure out how to lower gas prices along with the rising prices for milk eggs etc... In the long run that will do more for all Americans rather than these rebate checks.

    -- Posted by bedc2564 on Thu, Jan 31, 2008, at 9:23 PM
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