OT-possible tax rebates for us Americans.

[HeatherC]

Just saw this thread and of course had to chirp in.

I also think it's a bad idea. I kind of think of it along these lines.

If you are personally in debt, should you go out and spend an additional $300? Um...no. Put that money towards paying down your debt.

Hello people...have you seen our deficit. Now we are supposed to take more money and spend even more to make the deficit bigger.

Unfortunately, that's how a lot of people think. I certainly don't want more people to lose jobs, etc.. But..if you want to live in a "capitalistic" society, that's how the economy works.

Not to start an outrage, but this reminds me of what happened with Mitt Romney here in Massachusetts a few years ago. The state was almost bankrupt. Literally. So..he came in, cut things ....a lot of services, etc., that made people furious. BUT....it worked. It got MA out of all that debt...turned it into a surplus. But people are still mad about it. I don't get it. (And I'm not necessarily voting for him, just using this as an example.)

If your own budget has a deficit of say $200 a month, in order to fix that YOU HAVE to cut something else out or your deficit will get even larger. Do people not see that? I personally think they do, but don't WANT to cut back. Just my opinion. Go ahead...fire away.

HeatherC

 

[JonS99]

If that happens, we will be paying down our CC balances, not going to Best Buy...

Report I saw this morning said $400 per person, up to $1600 per family for those making less than $110K...

 

[Green Tea]

If that happens, we will be paying down our CC balances, not going to Best Buy...

Report I saw this morning said $400 per person, up to $1600 per family for those making less than $110K...

I wondered what the specifics were. Is 110K the upper threshold?

 

[JonS99]

We saw the story came on, were so busy talking about how stupid the idea was that we didn't listen real close to the details...

 

[jenm2878]

Is this an advance tax refund or just flat out free money? If it's an advance tax refund it's not free money.

 

[runwad]

I just heard on the radio that these additional monies is for people who make 85k or less.

 

[disneysteve]

Is this an advance tax refund or just flat out free money? If it's an advance tax refund it's not free money.

It is not an advance refund, but I would still say there is no such thing as "free money" when it comes to the government. We are all going to pay for this one way or another.

 

[shelly3girls]

If that happens, we will be paying down our CC balances, not going to Best Buy...

Report I saw this morning said $400 per person, up to $1600 per family for those making less than $110K...

I do not support this plan at all. I agree with most of the statements above. Clearly the money has to come from somewhere. From what a previous poster said it will be those making more than $110,000. When is the government going to realize that families living in expense areas are not rich if they are making above $100k?

 

[Marie17]

Thresholds supposedly are

85k for an individual
110k for married couples

I wonder if it will be based on net or gross income? I personally think it should not be limited to any class or income level and should NOT be tiered. If this money is not needed by a family they could easily spend it or give it away to help a charity. If it is needed by a family, they would most probably just save it or pay a bill.

 

[JodiR]

That same article says up to $800 a person. That is $1,600 a couple. I just hope this doesn't affect our 2008 taxes and this amount goes agains that.

 

[Jennifer823]

This could help our budgets!

http://news.yahoo.com/s/ap/20080117/ap_on_bi_ge/economy_stimulus

$300? Big whoop! Like that's going to actually HELP anybody at this point. If anything, it will go to pay off some of the debt most everyone has been incurring from the rising gas prices - and paying of debt really isn't stimulating our economy! This is just stupid.

 

[Jennifer823]

Thresholds supposedly are

85k for an individual
110k for married couples

I wonder if it will be based on net or gross income? I personally think it should not be limited to any class or income level and should NOT be tiered. If this money is not needed by a family they could easily spend it or give it away to help a charity. If it is needed by a family, they would most probably just save it or pay a bill.

If the idea is to get people to spend the money then why not give it to every income group? (But the free money has to come from somewhere.. i.e., the rich.) Stupid idea.

 

[dvcgirl]

I don't think that they've ironed out the details for this ridiculous plan yet. The Dems are calling for things like extensions on unemployment insurance and "food stamp" debit cards. The Repubs are calling for corporate tax cuts and rebates.

It's all a big joke....huge joke actually. The underlying problems are much bigger than the corporate led recession we had back in 2001. We have a full-blown credit crisis on our hands and we appear to be heading into a consumer-led recession. Putting $300, $400, or $800 in Americans' hands so they can live high on the hog for another couple of weeks and finally get that Wii they've been dreaming about....well, it's not going to fix this.

I'm sure Bush and his "Working group on financial markets" are scrambling behind the scenes today crafting some sort of huge govt' bailout for the monoline insurers (Ambac, MBIA....ACA is already toast). Rumors are rampant that both are in big, big trouble. And if they are allowed to go under, things will get *really* ugly as opposed to a little ugly, which is what we have now.

These companies are the ones that write insurance for those complicated CDO (collateralized debt obligations) that we've all been reading so much about. CDOs are basically bundles of a lot of different debt vehicles, like mortgages that are tied in bunches or "tranches" according to risk and made into securities that investors can buy on the markets. Credit cards and auto loans are also bundled into CDOs, but let's focus on the mortgage backed CDOs.

A lot of the banks out there are holding a lot of this paper, and some of it is basically worthless at this point because so many of those mortgages in those giant bundles are in default. Or the mortgage is more than the home is worth. Once the banks "own up" to holding this worthless paper they need to bring it back on their books, suck it up, and take the loss.

To hedge their bets, these big banks went to those monoline insurers way to buy insurance on those CDOs, in case they tanked. Another way to say, "covering their butts" .

In the event of the CDO defaulting, the bank goes to the monoline insurer with their little insurance policy in hand and the insurance company (in theory) pays them the face value of that CDO, so the bank can't *lose* any money on it. They won't make money on it, but they won't lose either.

Well guess what, many of those monoline insurers don't have the money to pay. As the housing market continues to fall, this problem gets worse. And until it hits bottom we won't know the true scope of the problem. As more and more CDOs default, and since the monolines can't pay, the banks will be forced to take these CDOs back on their books and have not choice but to write them down as a loss. So there could be much, much bigger write downs to come in the financial sector. And a lot of pain for states and towns that sell muni-bonds....they bought a lot of CDOs too.

This is like the Long Term Capital Management near collapse in 1998 where regulators scrambled to save them. This time these instruments are more complicated, and the derivatives market is much bigger. I'm sorry to ramble, but I thought some here might be interested in understanding what is happening. It's a big deal.

Why does this matter? It matters because nobody trusts each other in the banking sector right now. Banks are reluctant to lend other banks money right now because they don't know how much of this CDO garbage the other bank has on the books. And because money (debt) isn't flowing freely between the banks, the banks are forced to tighten their lending to the the public and to corporations. That affects us directly, but it also affects corporate growth, and jobs.

I'm defensive as I've ever been with respect to my own personal investments and plan to stay this way for awhile. We're half-way through our first "no buy January" (inspired by folks on this board), and it's not that tough guys. I mean, we're buying groceries and spending money at the Vet for my dog, but that's it. You find books laying around that you never read. We have DVDs laying around that we never got around to watching. It's been a great experience.

In February we're starting a "1/2 of our spending money" budget and padding the emergency fund with that other 1/2. It sure can't hurt right now with DH in the private sector. You just never know how safe your job is in this environment. Chances are we'll be fine. We already have a very solid emergency fund, but building up cash right now can have another benefit....there are going to be some incredible deals in the stock market when this thing is done.

 

[peanut12392]

Is this an advance tax refund or just flat out free money? If it's an advance tax refund it's not free money.

The child tax "rebate" that we got a while back was just an advance tax refund. (It had to be decucted from the refund on the next years taxes). I bet this will turn out to be the same. We try to come out even at tax time, I don't want an advance refund, no matter what they call it.

 

[Marie17]

If the idea is to get people to spend the money then why not give it to every income group? (But the free money has to come from somewhere.. i.e., the rich.) Stupid idea.

I do think they should NOT limit it to anyone group, tier, or class of income. I wrote that if a family doesn't need it they would most probably easily spend it or give it to a favorite chairty to help offset their taxes. If a family needed it they would most probably save it or pay some bills.

 

[jenm2878]

I don't understand why they are using $110K for a married couple and $85K for single. So a married couple could only make $55k/each while a individual can make $85k? It's not logical. (not that the government ever does much that's logical)

 

[Tnkrbelle565]

Yup...looks like the the $85/$110 cap put us just out of the running (unless the $110 is the adjusted gross income) for this. CNN is reporting that the exact details will be released at some point today.

 

[jenm2878]

I think we may be out of the running too. I know our gross income is more then that, but if you deduct our pre-tax stuff we may slide under. DH and I are in no way well off either.

 

[Schachteles]

Thresholds supposedly are

85k for an individual
110k for married couples

I wonder if it will be based on net or gross income? I personally think it should not be limited to any class or income level and should NOT be tiered. If this money is not needed by a family they could easily spend it or give it away to help a charity. If it is needed by a family, they would most probably just save it or pay a bill.

That is what I wonder too...hmmm...or will our deductions come into play because we make over that, but after interested on the house, etc we are well below the 110k

 

[HeyIt'sMe]

Same here. If unexpected money comes in from whatever source, it goes straight to savings. Sorry, Washington, if I'm not doing my part to support the nation's economy. I'm more concerned with MY economy.

That's actually what I thought when I read the article - - I'd put the money in my savings account, not spend it.

But, it sounds like we won't get anything because we are over the $110K for married couples.