President Bush signed a bill Wednesday that would give most taxpayers a rebate in the amount from $300 to $1,200. Legislators hope Americans will spend the money and give the economy a needed boost.
Auburn University Professor of Economics Roger Garrison said he didn’t have high hopes for the economic stimulus plan’s success.
“It’s a really bad idea because it is a tax cut without any spending cut,” Garrison said.
The legislation hands out billions of dollars, creating a deficit, which in itself was enough to argue against the policy, Garrison said.
“It likely will not have much of an effect anyhow,” he said. “Because it’s a one-shot sending out of checks, people tend to be more inclined to save rather than spend … They’re likely to squirrel this away or retire debt, and (the economy) will not even get the short-term bounce.”
Meanwhile, Gov. Bob Riley has expressed support for a bill that would keep state residents from paying state taxes on those federal rebates.
The bill Riley and state legislators have suggested to waive state taxes on the rebates has yet to be introduced.
But it looks good for state politicians, Garrison said.
“They’re just going on with the program,” he said. “You can hardly fault them for that. If they collected taxes out of that, it would take away from whatever stimulus it might provide. It’s politics as usual.”
Most people who file tax returns will receive somewhere between $300 and $1,200 this spring, with parents receiving more.
The extra money won’t mean extra effort, though, according to a statement from the Internal Revenue Service released Wednesday.
“The bottom line is that most people who qualify for the payments will not have to do anything beyond filing their 2007 tax return as usual,” the statement says.
The agency will use information on those tax returns to determine what qualifications taxpayers meet and the amount of money they will receive.
The IRS will begin issuing payments in early May.
The Associated Press contributed to this article.
kstallcup@oanow.com | 737-2574
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