[gvt]Many won't get tax refund checks, study shows

[Kip Brisbois]

Many won't get tax refund checks, study shows
More than 35 million people who earn income and file a tax return will receive nothing


Glenn Kessler - Washington Post


WASHINGTON _ For millions of Americans, the check's not in the mail.

Since Congress passed President Bush's tax plan last week, news reports have focused on one of its most striking features -- a late-summer mailing of rebate checks to 95 million taxpayers. But a study released Wednesday suggested that millions of Americans will get little or nothing.

Citizens for Tax Justice, a nonprofit research organization with the only nongovernmental computer model able to calculate the distribution of taxes, reported that almost half of those Americans in the bottom 60 percent of income earners -- more than 32 million individuals and families -- will receive no rebates. Nearly 35 million Americans who earn income and file a tax return will receive nothing, the group said.

"The people who are excited about this rebate aren't going to get it," said Robert McIntyre, director of the group, citing news stories for which poor workers and students are interviewed about what they would do with the checks. "And the people who aren't excited about it are going to get it."

How is this possible? About one-third of income earners pay little or no income taxes -- after exemptions, deduction and credits -- though they may pay substantial payroll taxes or sales taxes.

A single person will receive $300 if he or she has at least $6,000 in annual taxable income, while a couple will get $600 if they have at least $12,000 in taxable income. But taxable income is very different from income. For instance, a family of four would be able to deduct at least $18,500 in standard deductions and personal exemptions from their income before they pay income taxes, so they would need to earn at least $30,000 to get close to a $600 rebate.

According to Citizens for Tax Justice, 26 percent of married couples earning between $27,000 and $44,000 would receive no rebate. Among couples who qualify for a rebate in that group, the middle 20 percent of taxpayers, the average rebate would be $479.

Virtually everyone in the top 20 percent of taxpayers -- who pay about 80 percent of income taxes -- will receive a rebate, and generally the full amount, the study said.

Asked about the Citizens for Tax Justice study, Michele Davis, a Treasury Department spokeswoman, said: "We have a single statistic: One hundred percent of the people with income tax liability will receive a rebate."

McIntyre said "that is a fair statement," but it simply confirms that people at the bottom of the income ladder will not receive rebates.

Treasury Secretary Paul H. O'Neill said Wednesday that he hopes the government can accelerate the delivery of rebate checks, scheduled to begin in late July.

 

[Markus Archus]

I'm worried about not getting my check for a different reason - I'm moving in July. Anyone know where I should send a change of address notice if I want to ensure that my check is sent directly to me instead of relying on USPS to forward it?

 

[Live Oak]

How is this possible? About one-third of income earners pay little or no income taxes -- after exemptions, deduction and credits -- though they may pay substantial payroll taxes or sales taxes.

Well, like, duh!

If you didn't actually PAY any income taxes why should you get an income tax rebate check?

We expect to be getting a check and about time too! That damned marriage penalty hurt us bad in 1999 and 2000.

={(Oak)-

 

[ALF]

Most people are not going to think of it that way Live Oak and the way its being portrayed in the media is free money. I was looking forward to the check but now I have doubts as to getting one. When a large part of the pop doesn't get a check then the media will start in on the rich vs poor thing and how this was all a republican thing. The dems will jump in with a payout or a tax adjustment to help the poor unfortunates that the reps screwed over. More votes for the dems next time around.

 

[Bill Clo]

Interesting article.

I know how we can make it all fair for all. Everyone gets to pay X amount of money for taxes. Take the Federal budget and divide it by the number of seats in the House of Representatives. Each state then gets a bill for the appropriate amount. State gets to decide how to pay it, and how the taxes will be collected. Each person, regardless of income level pays the SAME amount. You can't afford your share? Work more, save more, or suck it up.

It was supposed to work this way in the Constitution, and it did work fine for many years, until "Income Taxes" were instituted. Then things went all to hell.

It's amazing the welfare mentality that pervades the people nowadays. They get all kinds of credits and goodies (earned income credit, deds for childcare, for children, you name it), and many end up owing NO tax. Then they bitch because they may not get a refund from Uncle Sam. Well, shit, they didn't pay anything, so they shouldn't get any back.

Whereas I get the shaft. We have no kids, no earned income credit, misc deds don't add up to 2% of our income. We're screwed. I work for FREE. My wife makes enough to ensure that we pay more in taxes than I earn in a year. I really resent it when these poor SOBs piss and moan because they aren't getting another handout from Massa. Screw them.

rant off

 

[Onebyone]

Bill,

re your comments -"I know how we can make it all fair for all. Everyone gets to pay X amount of money
for taxes. Take the Federal budget and divide it by the number of seats in the
House of Representatives. Each state then gets a bill for the appropriate amount.
State gets to decide how to pay it, and how the taxes will be collected. Each
person, regardless of income level pays the SAME amount. You can't afford your
share? Work more, save more, or suck it up."

Sorry Bill ole buddy but what you say is in NO WAY fair. I do not use all the benefits of the overgrown goverment agencies so I as a single mom with low income will be paying the same as a person making $50,000. to 100,000. who may will be living in a much larger residence, driving more cars on Interstates, using gov. controled lakes and streams for their boats, and getting many other benefits of society.

I do believe it should be a flat percentage rate from each person. 8% out of everyones income 10% from Corporations, after the FICA has been taken out as I don't see us getting rid of that. No credits or deductions for anything including business expenses, other than something that was bought to be resold like raw materials. No more leasing an expensive car to roll around in then deducting it from the cost of your taxes like WE should pay you for the priviledge. (You as in anyone doing it.)

obo

[ 06-01-2001: Message edited by: Onebyone ]

 

[bigwavedave]

BWAHAHAHAHAHAHA!

man, talk about your lead balloon! can't wait to see the administration talk their way outta this one.

 

[Garryowen]

One of the main problems with the concept of the income tax is in deciding exactly what is income, and what constitutes legitimate business expense. The IRS and congress decides what should or shouldn't be allowed, and there is simply no way they can collect enough information to make an informed decision all the time.

The only real solution is to eliminate the income tax, and the IRS. I don't know what the present figures are, but it used to be that the IRS spent about one-third of what it collected in administrative expense. Add the cost of compliance absorbed by business and individuals, and it becomes apparent that the income tax is a terribly inefficient means of raising revenue.

Every attempt at cutting taxes has been met with the same cries of favoritism. The system ain't workin', and it's useless to try to fix it. We have seen enough of how the .gov fixes problems. Just get rid of it.


regards,

Garryowen

 

[Gr8DaneDood]

Another article about the"tax cut".... beginning to smell funny.
*****************
JUNE 1, 2001

COMMENTARY
By Howard Gleckman

The Tax Cut: Now You See It, Now You Don't
Phase-outs, phase-ins, and expiration of the entire bill mean people won't really be getting the relief they're expecting


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The making of tax legislation, like the making of sausage, is never pretty to watch. But the 10-year, $1.35 trillion tax cut that President Bush is expected to sign into law with great fanfare in early June takes ugly to new lows. It isn't so much what the bill does, but the way it does it that makes the new law perhaps the most disappointing piece of tax legislation I've ever seen (and I've been covering tax bills since the 1970s).

Liberals hate the bill because it drains so much money from federal coffers. Conservatives are troubled because it provides only a modest long-term boost to savings and investment. But what may be most troubling are its gimmickry and false promises.

Part of the problem is Congress started out with a specific, if completely arbitrary, number in mind for tax cuts -- $1.35 trillion -- and then did everything in its power to reach it. That's no way to conduct tax policy. Another problem: The conference of House and Senate negotiators on the final version rushed through the process. Normally, conference committees fix the anomolies in tax bills. Not this time.

Result: Not since the invention of the federal income tax in 1913 has there been a tax bill that promised to do so much with so little. Sure, $1.35 trillion sounds like a bucketful. But to make all these promised cuts fit into that trillion-dollar-plus box, Congress created a shooting gallery of tax breaks that appear and disappear, just like those hokey pop-up ducks in an arcade. One year a tax provision is in effect. The next year, good-bye.

POOF, IT'S GONE. Here are just a few examples. Families get new education tax breaks right away but begin to lose them in 2006. Marriage-penalty relief doesn't even begin to help most couples until 2005. Significant rate cuts don't really kick in for wealthy taxpayers until 2007. The estate tax isn't repealed until 2010. And the whole law expires Dec. 31, 2010. That's right -- it expires. Everything would go back to where it is today. The result: A tax bill that looks like Harry Houdini designed it.

To understand what's going on here, let's assume the tax cut really takes place just as the law was written. Taxpayers will get about $45 billion in economic stimulus in 2001 -- mostly through the rebate checks we're all supposed to get by September.

Then the bill provides an additional $350 billion in tax cuts through Bush's term in office, which ends in early 2005. Much of the benefit in these early years goes to moderate-income taxpayers -- those with annual taxable income between $20,000 and $50,000. The big reason: the creation of a new 10% tax bracket.

From 2006 to 2010, the new law is supposed to pump out most of its promised tax relief -- more than $800 billion. Much of that will go to upper-bracket taxpayers, thanks to rate cuts for the wealthy, generous new rules for contributing to IRAs and 401(k) retirement plans, and the repeal of the estate tax.

Then, come 2011, the charade comes to an abrupt end. Tax rates go back up, the estate tax reappears, and the marriage penalty resumes. Why? Because if those tax breaks continued into 2011, it would have cost an additional $250 billion, and Congress didn't want to give Bush the $1.6 trillion tax cut he campaigned on.

NO SUPPLY-SIDE IMPACT. Unfortunately, the problems with this bill don't end with the financial sleight of hand. Think about what this structure means for the economy. Larry Lindsey, the White House's top economic adviser, likes to promote this bill as the tax cut for all seasons. It is, he claims, both a short-term stimulus that can jump-start today's sluggish economy and an engine of long-term growth.

Let's get real. Roughly $45 billion isn't much in a $10 trillion economy. And all those phase-outs negate any supply-side impact, which assumes a compounding effect from long-term savings and investment. In reality, the law is a fiscal version of one of those 1950s do-it-all appliances. Like a combination electric can opener and toothbrush, it purports to do two jobs -- but not very well.

Look at how the tax cuts for upper-bracket folks are handled. On one hand, the new law promises even more generous cuts for the rich than advertised. On the other, it takes them all away. Here's how it works: By 2006, the existing top 39.6% tax bracket is cut to 35%, the 36% rate to 33%, the 31% rate to 28%, and the 28% rate to 25%.

It also eliminates two hidden tax rates -- back-door reductions in the value of both personal exemptions and itemized deductions -- that now clobber taxpayers with more than $136,000 in taxable income. Together, these two adjustments can quietly raise tax rates by as much as three percentage points.

HIT WITH THE AMT. Doing away with these looks good so far. But there's a catch. Under current law, taxpayers in the 28% bracket and above are liable for what is called the alternative minimum tax (AMT) -- a separate set of rules that apply to folks whose deductions and credits lower their tax bill too sharply. Because the new tax bill cuts rates and creates more write-offs, as many as 35 million more taxpayers could be hit with the AMT by the end of this decade.

The bill provides modest relief from the AMT -- but only up until 2005. Then, just as the deepest tax cuts kick in and, paradoxically, taxpayers need help the most, the AMT protections disappear. As a result, if the law isn't changed, about one-quarter of the people who have been promised big tax cuts under the new law are in for a big shock.

Then there's the estate tax. The bill ever so slowly raises the size of an estate exempt from tax from $700,000 today to $3.5 million by 2009. It also gradually lowers the tax rates on estates subject to the levy. Then, on Jan. 1, 2010, the estate tax is repealed entirely.

But Uncle Charlie better die quick. As of December 31, 2010, the estate tax is unrepealed. Even worse, for just that one year, heirs will be required to do a set of immensely complicated capital-gains calculations on the assets for such estates. They won't have to do them for the estates of those who die in 2009, or in 2011. But they will for those who die in 2010.

THE REAL PRICE. No way, you might be saying. Guess again. Maybe somewhere along the line Congress will fix this mess. Perhaps the estate tax and the rate cuts won't really be repealed in 2010. Maybe the AMT problem will be addressed. But if so, then the price tag on the $1.35 trillion tax cut should really be $2 trillion through 2011. And, according to some estimates, it would cost more than twice that -- or a mind-blowing $4.3 trillion -- in the 10 years after that.

It's pretty simple really. Either the new tax law will never really deliver the tax cuts it promises, or it will cost far more than the $1.35 trillion it purports to. Someday this will provide fodder for a textbook case of how not to write a tax bill. In the meantime, Congress is promising the American people something that can't be really counted on.
http://www.businessweek.com/bwdaily/dnflash/may2001/nf2001061_999.htm