January 28, 2008 - PPM - Tax Rebates

This week’s PET PEEVE MONDAY was a no-brainer. Marketed by politicians as a “tax rebate” it is only class warfare and the redistribution of wealth. Whenever you take money from one class of people and give it to others, IT IS NOT A REBATE.

First, it is not a tax rebate, because Congress is proposing that $300 will go to those who earned at least $3,000 last year but did not make enough to pay income taxes. By definition, to receive a rebate, you need to have originally paid. This portion of the proposal is GOVERNMENT WELFARE.

Those who earn up to $75,000 as an individual or $150,000 as a couple will get $600 each.

Those who make over $150K, or the top 5% of all income earners, pay 60% of all the federal taxes. It’s ironic that this demographic will NOT be receiving rebate checks. They don’t even get a thank you.

This is nothing more than an election year stratagem. It is the redistribution of money from one class to another. Politicians are pandering to the poor and middle class by trying to buy their votes. Using political stunts to stabilize the economy is a mistake. The Federal Reserve's 75 basis point cut in the fed funds this past week will prove far more effective.

In my opinion, NO TAX REBATES ARE WARRANTED. The economy and stock market are in need of a correction. Ask any economist about the negligible effect of this $150 Billion cash grab on our $12 Trillion GDP. I fail to see how borrowing another $150B (with interest) from China so Joe Consumer can buy a flat screen TV from China will offset a recession.

Greed and incompetence caused the sub prime mess and real estate crisis. This spurred the onset of this recession. People bought multiple spec homes hoping to make a quick buck. Others bought houses they couldn’t afford at artificially low interest rates. Yet they want their government to bail them out. This pattern of continually rewarding aberrant behavior is wrong. What ever happened to personal responsibility?

I find it discouraging that I took out student loans, paid them off in full and on time, got a job, PAID TAXES, and now am told that I’ve been too responsible and too successful. NO SOUP (or rebate) FOR YOU!!!

There has never been a more opportune time for a flat percentage income tax or even a national sales (consumption) tax. Let’s implement some real reforms – starting with the oppressive and egregious tax code.