Will An Economic Stimulus Package Work?

[W2R]

For a week the media has been telling people the rebates
would be $800/$1600 [the Bush plan]... how many people
have already spent that on their credit cards !

That is so true!! I spent $100 on books recently, and probably would not have done that otherwise. On the other hand, I can probably cram it into my budget with a crowbar if the [-]$800 [/-] $300 doesn't materialize.

Don't want to, though. I want my $800! LOL

 

[Helena]

Question

Someone on another forum said income taxes had to be paid on the
last rebate money... Is that true ?? How is a tax rebate, income ??

 

[FinanceDude]

Yup, paid taxes on the last one in 2002 or whatever. It was called an "early tax refund"..........

I have 2 kids, and DW and I work, does that mean I get $1200?

 

[Helena]

Yup, paid taxes on the last one in 2002 or whatever. It was called an "early tax refund"..........

A tax refund is not income. How can it be taxed as income ?

I have 2 kids, and DW and I work, does that mean I get $1200?

That's the way I understand it... as long as you don't make more
than the cutoff income ceiling.... but all this is subject to change.

 

[JPatrick]

Yup, paid taxes on the last one in 2002 or whatever. It was called an "early tax refund"..........

I have 2 kids, and DW and I work, does that mean I get $1200?

I think there is an earnings test---$150,000 for couples was talked about as the upper limit to get a rebate.

 

[FinanceDude]

I think there is an earnings test---$150,000 for couples was talked about as the upper limit to get a rebate.

I'm screwed...........

 

[WanderALot]

That is truly amazing. Taxation without representation. It just shows the extent of government expediency. Anyone with a tax return is traceable and therefore deportable. But that would reduce the pool of cheap labour so the US government turns a blind eye. One wonders what will happen in a recession when legal US residents want a job, any job. These people are so vulnerable.

I'm confused, it sounds like this happens because an illegal alien gets a fake Social Security card (see the text that Alan quoted from the link in #50). If its a fake social security number, or a valid SSN that belongs to someone else, how is the SSA supposed to track down this person?

What's required to get a SS check anyways? Does one need to prove that they are/were a legal resident or citizen when the SS taxes were originally paid?

 

[W2R]

I think there is an earnings test---$150,000 for couples was talked about as the upper limit to get a rebate.

Oh great (not!!). I suppose that means $75K is the cutoff for singles.

If so, then I'd better get out the crowbar and start jamming that $100 spent on books back into my normal budget.

 

[Helena]

Okay... here's the scoop on how the
government re-bated and switched
in 2001/2002.

I hope it will be different this time...
but what are the odds


Release: Tax Rebate

 

[FinanceDude]

I see the tentative package, lets see my wife gets zero, did not work last year. I get 300 dollars. Wow. But then again if the government is counting on the likes of me to spend well they are going to well.... BUT the 300 would pay for the new small tv for the bedroom... Hummm... This is what our elected leaders are doing!? This quite frankly is an embarrassement, Better we should rebuild the american railroads, The roads and bridges, put people back to work real work fixing the darn broken parts of the infrastructure. Start building 50 new nuke power plants, on and on, but nah give americans a few more dollars that the government will have to borrow to have the fat american family go to the mall and spend.

Pelosi, Bush, they all stink.

Hold your horses, Tex........... It's an election year, and both parties DON'T want to be the "wet blanket" that let the economy go into a funk, so this is merely "positioning" for the elections.

Come on, you can't build a political platform on "I'll fix the infrastructure of America"...........you CAN build a platform on: "We gave GOOD people some help when they needed it most, that's what GOOD government does".............

I guess they didn't include retired folks because they realize when they raise taxes on us working folks they will get "paid back again and again"........

 

[GatorBuzz]

A deal has been reached. Here are the specs:

Stimulus package deal near; no checks to wealthier workers - Jan. 24, 2008


Edit: It has not been voted on by Congress yet, but Pelosi, Boehner and the WH house agreed on this plan.

 

[W2R]

Oh great (not!!). I suppose that means $75K is the cutoff for singles.

If so, then I'd better get out the crowbar and start jamming that $100 spent on books back into my normal budget.

A sudden thought (bolt of lightning?): Could the $75K be the AGI? Then those who contributed the max to their 401K and over-50 catchup ($15.5K+$5K) could actually earn as much as $95.5K?

Hope springs eternal...

 

[Helena]

A sudden thought (bolt of lightning?): Could the $75K be the AGI? Then those who contributed the max to their 401K and over-50 catchup ($15.5K+$5K) could actually earn as much as $95.5K?

Hope springs eternal...

I would assume the $75K is taxable income... but wait to read the
fine print. I still want to know just how it will affect next tax year !

 

[cute fuzzy bunny]

I've always been a fan of companies paying out a dividend to get the money out of their hands, since I dont think that most company managers can redeploy the capital efficiently. Except for WB that is.

Same feeling applies to politicians. Anytime I can get money out of their hands and into mine is a good day. Unfortunately that only works well when you're operating on a balanced or surplus budget with no deficit.

This is simply one of the last bastions of credit card spending. The american consumer is tapped out, so lets give them a few hundred bucks to blow to spruce up the immediate economy, then we'll tax them later to get the money back, plus all the interest paid on the principal (to china?). IOW, push the problem out a little and make it slightly worse.

On another note, I'm still impressed at the breadth and depth of situations that some folks can drag the illegal alien situation into.

 

[FinanceDude]

A tax refund is not income. How can it be taxed as income ?

Because the govt SAYS SO!!

 

[clifp]

I love this quote from the article.

The most effective way to stimulate housing and minimize the potential for a recession is for lawmakers to raise the limit on conforming mortgages to $625,000, which would open safe and affordable financing to buyers in high-cost areas," said Richard Gaylord, president of the Realtors trade group. "It is grossly unfair that some Americans do not have access to low-interest rate loans."

Let me see in addition to the mutltitude of tax breaks we already give home owners We want to raise the limit on federal guarrantee mortgages to encourage even more homeowner to take out loans they can't afford to encourage further speculation in overpriced markets like California, NY, Hawaii etc. Give the guy an A for Chutzpah

 

[twaddle]

You realize that his [-]chutzpah[/-] proposal made it into the bill, right?


To address the mortgage crisis, the package also raises the limits on Federal Housing Administration loans and home mortgages that Fannie Mae and Freddie Mac can purchase to as high as $725,000 in high-cost areas. Those are considerable boosts over the current FHA limit of $362,000 and the $417,000 cap for Fannie Mae and Freddie Mac's loan purchases.

 

[Buku]

I would imagine that a LOT of Americans will follow your lead. This will be a windfall for those companies that make HDTV's, I think. Many of them are headquartered in Japan, too, though I'm sure a lot will also go to retailers like Circuit City and Best Buy.

Is Circuit City still around? I thought WallMart put a bullet in them with their steep TV discounts...

 

[clifp]

You realize that his [-]chutzpah[/-] proposal made it into the bill, right?


To address the mortgage crisis, the package also raises the limits on Federal Housing Administration loans and home mortgages that Fannie Mae and Freddie Mac can purchase to as high as $725,000 in high-cost areas. Those are considerable boosts over the current FHA limit of $362,000 and the $417,000 cap for Fannie Mae and Freddie Mac's loan purchases.

No sadly I did not. Anybody know what the min down payment is for a Fannie Mae loan.

A 725K 30 year loan @5.25% has a payment of $4,000 add insurance, tax (probably $9000+ a year for a 800K+ CA home) you are talking payments approaching $5K a month. A couple would need to make at least $150K and preferably 180K (house expense 1/3 income) to afford this house.


Well at least Congress is acting to keep the bubble expanding.

 

[W2R]

Is Circuit City still around? I thought WallMart put a bullet in them with their steep TV discounts...

Here you go - - want a nice TV? This one ought to be pretty cool.

Buy the Panasonic 58" Plasma HDTV and other LCD & Plasma TVs at circuitcity.com

 

[CCdaCE]

Look at it the other way... do you want $X next time you do your taxes or $X now?

I don't see how the two relate. Unless someone is saying you can have $X now or $X+Y later. I haven't interpreted it that way.

I'm with CFB, it's like a dividend -- issue it ASAP. But, wait, isn't it my money to begin with? Vicious cycle/circle.

-CC

 

[cute fuzzy bunny]

A couple would need to make at least $150K and preferably 180K (house expense 1/3 income) to afford this house.

In LA, the SF bay area and Manhattan, I think quite a few dual income households are well above that level.

But hardly the folks who need extra perks to help them achieve mcmansionhood less expensively.

 

[FIRE'd@51]

In LA, the SF bay area and Manhattan, I think quite a few dual income households are well above that level.

Exactly! Two married teachers could easily make this income, or considerably more in places like the NY city suburbs. In a nice NY city suburb, a starter home easily runs 750K-1M, so it is virtually impossible to buy a home without a jumbo mortgage. I'm sure this is true in LA or SF, as well.

One of the problems in the current housing crisis has been that jumbo loans (those greater than 417K) have been carrying mortgage rates of 0.75%-1.00% higher than the conforming ones which Fannie and Freddie currently buy, even for folks with good credit who could make a 20% down payment.

 

[clifp]

Exactly! Two married teachers could easily make this income, or considerably more in places like the NY city suburbs. In a nice NY city suburb, a starter home easily runs 750K-1M, so it is virtually impossible to buy a home without a jumbo mortgage. I'm sure this is true in LA or SF, as well.

One of the problems in the current housing crisis has been that jumbo loans (those greater than 417K) have been carrying mortgage rates of 0.75%-1.00% higher than the conforming ones which Fannie and Freddie currently buy, even for folks with good credit who could make a 20% down payment.

All of this is true (although starter homes for $750K is bit hard to to swallow).

The point being this is supposedly a stimulus for the the middle class. I think a reasonable definition of middle is those households with income that are above the lowest 20% and below the highest 20%. Perhaps you could even stretch the definition to include those under $100,000 since around 15% of households make over $100K. However, a 150K income is in no way a middle class cut since 97% of households make less than that amount. Median household income in the US is <$50K so once again Democrats scream about Bush tax cuts that only help the rich, and proceed to pass a stimulus package that helps their rich supporters on the coast. But of course the supports don't think there are because the only make 200-250K and they bare can afford their million dollar houses and 3 year old Lexus.

 

[Retire Soon]

You realize that his [-]chutzpah[/-] proposal made it into the bill, right?


To address the mortgage crisis, the package also raises the limits on Federal Housing Administration loans and home mortgages that Fannie Mae and Freddie Mac can purchase to as high as $725,000 in high-cost areas. Those are considerable boosts over the current FHA limit of $362,000 and the $417,000 cap for Fannie Mae and Freddie Mac's loan purchases.

I might add that the Fannie Mae and Freddie Mac increase to a maximum loan amount of $729,750 for cities with high housing costs will only be temporary as it will expire December 31, 2008. However, the same program for FHA will be permanent.

More Risk for Fannie, Freddie? - WSJ.com