Looking for a boost

Tuesday, March 18, 2008

By now, most Americans know about the rebates the IRS will be sending to households across the nation starting in May. The rebates are part of a $168 billion effort to stimulate the economy through consumer spending. The government expects most recipients will go shopping with their rebates, ranging from $300 per individual to $1,200 per couple plus an additional $300 per dependent child.

Despite the widespread publicity and water-cooler conversations about the rebates, the IRS is sending letters to 130 million households explaining the rebate program. The letters also include information about qualifying for the rebates.

Some taxpayers have been upset by the expense ($42 million) for sending the advance letters. And $42 million certainly sounds like a lot of money to average taxpayers. But it amounts to 0.025 percent of the total $168 billion stimulus package.

The IRS contends the letters will offset much of the confusion about the plan. This means IRS employees will have to deal with fewer inquiries from puzzled taxpayers regarding the rebates.

Others, including some congressional Democrats, say the letters were unnecessary and the money could have gone for more urgent needs.

How the letters are viewed, however, is less important than how the rebates will affect the current sluggish economy. Consumers must pump the rebates into retail purchases in order for the economy to be stimulated.

It will be up to taxpayers to decide, after the rebates are mailed, if the advance letters were warranted. And that will depend in large measure on whether or not Americans see any economic improvement down the road.

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