Democrats Want To Give Tax Rebates To People Who Pay No, Or Very Little, In Taxes

by Rob Port | January 19, 2008 2:58 pm

Whenever liberals start carping about “tax cuts for the rich,” I respond by saying that with “the rich” paying nearly all of the taxes in this country it’s sort of hard to give the “poor” any tax relief at all. After all, you can’t exactly cut or rebate something that doesn’t exist in the first place. Or is such a small amount as to be insignificant.

But that doesn’t stop the Democrats, and their always faithful liberal mouthpieces in the media, from demagoguing an economic stimulus package that includes tax rebates for “the poor.”

WASHINGTON[1] – The poor are the people most likely to spend a tax rebate, if they are handed one in an economic revival plan. Whether that happens depends on who prevails — the White House or the Democrats who run Congress.

You gotta love that last line. If Bush gets his way, the poor don’t get any help. That’s a fair assessment, right?

Ok, enough sarcasm, the article continues:

Democrats want to make sure rebates get to more of the poor, including those who have jobs but earn too little to pay income taxes.

The idea is the more that people spend, the more it will energize an economy threatening to slide into a recession for the first time since 2001. According to many economists, the lower that people are on the income ladder, the more probable it is that they will spend a rebate and spend it quickly — just the shot for the ailing economy. These people are more likely to be living from one paycheck to the next, without other assets to draw on.

Basically, what the Democrats want to do is not so much tax relief as it’s just giving money to “the poor” who paid very little in taxes in the first place. Obviously, everyone (the poor included) pays payroll taxes, but are the Dems really suggesting we take money away from Social Security and Medicare?

The best way to handle this would be to do an income tax rebate back to every citizen in proportion to the amount of income tax they paid in the first place. Perhaps a rebate in the amount of the percentage paid in. That would be fair, though those who paid little or nothing in would get nothing back.

Of course, if any rebate is to truly stimulate the economy it needs to be coupled with supply-side tax rate cuts as well. Any economic stimulus driven by a rebate will be ultimately short-lived. The key to long-term economic stimulus is to ease tax burdens on productivity, which is what the income tax is.