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Stimulus? More Like Wealth Redistribution

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Justin gave us the details. Now here’s my take.

What we have here is a nice little wealth redistribution plan. If these kinds of tax rebates actually stimulate the economy, then we could debate the appropriateness of excluding wealthier households. But the problem is, rebates don’t work. Historically, people use the rebates to pay down personal debt or they put the money into savings. They don’t put the funds back into the economy. That means, by limiting who gets money from the stimulus package, our government is taking money away from a small group to help a large group pay off their credit cards.

If the point of this legislation is to infuse the economy with money, what does it matter how much you make? Are people who make over $75,000 a year less likely to spend a rebate? Certainly not. Would giving a rebate to these households (they make up just 5% of U.S. households) significantly increase the expense? No. But these people are “rich” or at least “not poor” so I suppose it would be unseemly for the government to be padding their wallets.

And yet, $300 checks are going out to those who pay no taxes at all. On one end of the income scale we have a full-on handout and on the other end we have what amounts to a tax penalty. All I can figure is that President Bush was so desperate to get this showpiece of a bill passed that he let the Democrats dictate the terms. And Democrats are too often more interested in symbolic shows of supporting the less fortunate (and marginalizing the well off) than they are in making substantive reforms.

Of course, I’m not turning down my check. It’ll help pay off some debt. That will help my finances but not the economy.