Are we sending our $300 rebate checks right back this year?
February 22, 2002 9:02 AM   Subscribe

Are we sending our $300 rebate checks right back this year? According to MIT economist and New York Times writer Paul Krugman, line 47 of the 2001 1040 will be designed to do just that. so you know the drill u:metafilter p:metafilter.
posted by McBain (40 comments total)
Damn. I wonder if those left-wing charities I gave my cash to will give it back.

"Look, I'm sorry, but they want it back. Yes, I know you need to build playgrounds, but daddy got to eat, too.
posted by ColdChef at 9:12 AM on February 22, 2002

As I recall this was pointed out (it's an advance, not a rebate) in a number of places around the time the checks were going out - methinks not too many noticed?
posted by jalexei at 9:16 AM on February 22, 2002

I could be wrong, but I thought I heard the word "rebate" from Bush's own lips. If not, then from all the conservative pundits at the time.
posted by McBain at 9:19 AM on February 22, 2002

Shit. A few days ago my wife told me that her friend had claimed this very thing. I snorted (as I do when I hear something so ridiculous it couldn't possibly be true). How stupid is this? Now I know that there's no need to issue a press release when politicians do something stupid, but if I understand this the way I think I do, this is going to go down as one of the great gaffes in history.
posted by pardonyou? at 9:19 AM on February 22, 2002

I guess it was always right in front of our eyes.
posted by pardonyou? at 9:25 AM on February 22, 2002

The theory behind last year's checks was that they are an advance on our discounts for this year. So this year, the people who barely qualified for the rebate last year will pay the same this year as they did last year (before the rebate). However, I was a college student and didn't qualify for the rebate, will I still have to pay the previous rate this year?

As far as last years' rebate checks go, they were simply a publicity stunt so that the pols could claim they were working for their people.
posted by wsfinkel at 9:27 AM on February 22, 2002

A few analysts — notably Stephen Roach of Morgan Stanley, who deserves a medal for his dogged skepticism about the "new economy" during the bubble years — think that we're headed for a "W-shaped" or "double-dip" recession, in which we have reached a bottom but not the bottom.

A "W-shaped" recession! That is a joke right?
posted by srboisvert at 9:35 AM on February 22, 2002

The double dip recession theory is upsetting too, and it seems realistic based on my own experiences. Does anybody remember the sensationalist news magazine stories from the early '90s about Generation X graduating from college and having to work at McDonalds? The future looks far bleaker for the folks I know who finished college in the last couple of years. Even the mall isn't hiring out here.
posted by croutonsupafreak at 9:38 AM on February 22, 2002

(it's an advance, not a rebate)
*hugs espresso machine defensively*
posted by dong_resin at 9:43 AM on February 22, 2002

Crap crap crap!

The only thing worse than a bad economy is politicians screwing around in a way that promises to prolong or worsen the bad economy. Is it supposed to heal itself?
posted by Outlawyr at 9:43 AM on February 22, 2002

And Paul Krugman has just coined the catch-phrase for Democrats everywhere in this election cycle. A "W-shaped recession" indeed! hahahaha
posted by briank at 9:48 AM on February 22, 2002

Why don't they just come out and say that it is protection money??

"My fellow Americans. Please be on the lookout for a 50 foot long Hedgehog. I believe his name is Spiney Norman. Previously, we believed that he lived in Afghanistan, but there have been sightings on our soil. Please call the proper authorities if you see this menace. He is out to get me. I should have never stolen that vending machine."
posted by Settle at 9:49 AM on February 22, 2002

Dinsdale? Dinsdale! DINSDALE! (Sorry, Monty Python moment...happens to the best of us, doncha know.)

As to the rebate/advance: Bait and Switch. Oldest trick in the book. (Ok, second oldest....the oldest trick involves rope, 2 limber teenagers and a block of goat fat...but that's not important now.)
posted by dejah420 at 9:59 AM on February 22, 2002

Stephen Roach of Morgan Stanley, who deserves a medal for his dogged skepticism about the "new economy" during the bubble years

Moral: if you remain a pessimist long enough, you will eventually be proven correct.
posted by ook at 10:05 AM on February 22, 2002

Fuck. I sent in my 1040 about two weeks ago, and I'm one of those millions who passed off Line 47 useless bullshit, unaware that I needed to specify that no, I did not receive any idiot-bribe from Dubbya last year because I was in college.

"Rate reduction credit. See the worksheet on page 36."

Well, most of the other lines with similar titles are bullshit. What was I supposed to do...actually read the booklet when I don't understand something? I would still be calculating my taxes from my lifeguarding job when I was 15 years old if I did that.
posted by zekinskia at 10:05 AM on February 22, 2002

At this time, I would like to praise TurboTax for its glorious existence. I was also in school last year and didn't qualify, but, after a few "yes/no" clicky-clickies, I was all good to go.
posted by Mrmuhnrmuh at 10:20 AM on February 22, 2002

I'm not entirely sure what Krugman is talking about. Line 47 is so that those people who did not receive their $300 checks in the mail can deduct the $300 from their taxes - under no circumstances will the value on line 47 increase the amount anyone has to pay.

Read the booklet - the relevant section is on page 36.
posted by jaek at 10:22 AM on February 22, 2002

No, the problem is then that it isn't a rebate on taxes paid, it is an advance on tax cuts. It's not the same thing and it is misleading. Bush made it seem like he was sending everyone cash they had already been taxed and then cut taxes, when all he really did was cut taxes. He wanted credit for the same money twice.
posted by McBain at 10:31 AM on February 22, 2002

Anybody have any notable quotes from politicians illustrating the rebate hype?
posted by Mach3avelli at 10:32 AM on February 22, 2002

"Tax Relief for America's Workers"
(printed on every $300 check that I saw)
posted by BentPenguin at 10:37 AM on February 22, 2002

I also find it hard to believe a stink is being made about this now. Granted, the term 'rebate' was being thrown around a lot back in the day, but I know I read several articles then explaining that it was actually an advance, which calmed me down nicely when I found out I wasn't getting the check.
posted by Mrmuhnrmuh at 10:37 AM on February 22, 2002

Uh, so maybe i'm confused. If each of those $300 checks was an advance, and now we (those of us who received said checks) will be paying that amount back... well then what happens to Daschle's argument that the President's "rebates" squandered the surplus?
posted by gangcandy at 10:55 AM on February 22, 2002

the scary part is I am pretty sure this and about 1000 other experts are wrong. You will not have to give your money back. The tax check from last year represents the tax bracket reduction from 15% to 10% because that reduction is retroactive to Jan 1 2001. When your taxes are figured to be sent in on April 15, all tables issued and used by the IRS are still the 15% tax tables. So in other words, you got a check instead of getting to use the lower tax bracket at tax time.

The line 47 is only if you didn't get as much as you believe you are entitled to.
posted by domino at 10:59 AM on February 22, 2002

I posted about this last summer here on metafilter, when the checks were first arriving. There were plenty of people saying it was clearly not a rebate back then, and how wonderful it was to get an early advance on this year's rebate.

It just seemed like a cheap way for Bush to pay off the country, to buy approval points.
posted by mathowie at 11:05 AM on February 22, 2002

What if you never got around to cashing the damned thing?

posted by Mars Saxman at 11:16 AM on February 22, 2002

Correction: Krugman's at Princeton, not MIT.

I liked the op/ed piece. Though I agree that it's misleading to say that we're giving back the checks, it's also misleading to call them rebates instead of advances.

Another point: it was certainly wrong to say (last summer) that Bush's tax cut killed the surplus, since the only part of the bill that had been enacted was the advance that the dem's insisted on. However, it's entirely correct to point out that the Bush tax cut has destroyed the projected surplus.
posted by electro at 11:36 AM on February 22, 2002

Krugman got a PhD in economics from MIT.
posted by McBain at 12:27 PM on February 22, 2002

Well - Joe Guy's perspective was that he was given that money, only to now find that its being taken back, and that that was known all along but never adequately explained. It just looks stupid, and will confirm people's latent suspicions that this administration is incapable of helping where the economy is concerned.
posted by xammerboy at 1:29 PM on February 22, 2002

The incredible irony about this is that it was the Democrats who first suggested the rebate checks, and the Republicans hated the idea. But once they compromised, Bush "stole" credit for it. And now the Dems are blaming him. What a bunch of opportunists. More on all this here. (Link courtesy of Google's cache.)

For the record, the money we little people are or aren't paying this year pales in comparison to the amount that the corpoprations and mega-rich definitely WON'T be paying over the next decade.
posted by oddovid at 1:34 PM on February 22, 2002

xammerboy - how exactly is the money being taken back again?
posted by jaek at 1:47 PM on February 22, 2002

My father's an accountant, and nearly all his clients this year got the bad news. Most of them are livid.

The Democrats played it absolutely beautifully. They dangled the bait, and Bush grabbed it. Not only that, he grabbed it and ran with it. Joe Voter's impression is most likely that Bush gave them $300, but now he's taking it back. Masterful politics.
posted by solistrato at 1:56 PM on February 22, 2002

I don't see the problem. The way it worked was this:

For first part of year, we were all taxed based on a rate of X. Congress lowered that rate, so we were taxed too much.

Rather than wait until everybody did their 2001 taxes, they sent out checks to offset the difference.

So now that everybody is doing their taxes, they take total amount paid in tax subtract the amount that should have been paid, and arrive at a refund or amount owed. Then they subtract the amount already paid out as a refund (the checks they sent) to arrive at the current amount due or the remaining amount to be refunded.

How is that a bait and switch or anything other than what it was described as?
posted by willnot at 3:13 PM on February 22, 2002

willnot's got the right numbers- people aren't losing money (well, excepting cases where the 'refund' counts as income on state taxes, effectively making that $300 double dipped in state taxes), but as noted it's a perception thing. Basically, people will fill out their tax form and find that when they calculate using the adjusted level (10% instead of 15%) that they'd overpaid on taxes withheld this year, but aren't getting a refund 'cuz they already got it. They are still paying less than before (not by much) but the way it worked out makes it look like that "found money" which was pitched as a rebate from 2000's taxes is now being taken back by Bush.

Really, that was smooth operating by the Dems- bravo. ethinks they're finally learning how to play with the GOP... of course, if this becomes a populism issue, the right-wing media will start hammering how this was really the Dems idea to begin with, blah blah blah. True? Yes. But petty- they was outwitted, fair and square.
posted by hincandenza at 5:45 PM on February 22, 2002

How about this willnot - what was the point? All the hullaballoo over of the checks. The whole do or die business about sending them out. And then finding out that it was always the plan that that money be returned come tax time to the government. What?! Why did they bother? Its not that people won't understand the new scenario of how "rebate" works, but I think that at the least they will be bewildered.
posted by xammerboy at 5:46 PM on February 22, 2002

The money isn't being returned. It's like the government said we're going to give you 1200 back on your taxes. We want you to start spending it, so we'll give you half now and half come April. in fact it's not "like" that. It's exactly that.

I don't even understand the perception that the money is being returned. Judging from this thread, a lot of smart people seem to have that perception so I guess it's as good as real in the spin machine, but I seriously don't get it.
posted by willnot at 6:55 PM on February 22, 2002

wilnot, i think the perception is like this: (at least it was for me)

march 2001 - get tax refund of $1200
sept 2001 - get tax rebate of $300

woo-hoo! my total tax refund in 2001 is $1500

then i read megnut's page and realize that the $300 was an advance on my 2002 tax refund, NOT, an extra refund from the return filed in 2001

boo, now my 2002 return will only be $900

unless you always understood what was happening last year. i didn't until i read meg's page in august 2001 (i think)
posted by centrs at 9:30 PM on February 22, 2002

i mean, i know it works out the same, money-wise, but a lot of people thought that $300 was pure extra so they are being surprised when they find out they are getting $300 less back this year. i think the original post was misleading. nobody is paying more than they should. it just looks that way.
posted by centrs at 9:33 PM on February 22, 2002

Ahh. So if you're like me, and you never get a refund to begin with, all this means is that you're $300 deeper into the hole come April 15th, right?

posted by Mars Saxman at 10:00 PM on February 22, 2002

Jeez, folks, it's not that hard to figure out. The $300 "rebate" was an advance credit on your year 2001 taxes. This is what the instructions (820K PDF) for line 47 say:

"If you received (before offset) an advance payment of your 2001 taxes equal to the amount shown below for your 2001 filing status, stop. You cannot take the credit because you have received the maximum amount of the credit."

That is, if you received a check, don't put anything in line 47. If you didn't receive a check, complete the worksheet to see if you are eligible for the credit. (Line 47 is in the credits section of form 1040--it can't increase your tax liability).

If you didn't receive a check, then if you don't usually receive a refund, that is, you break even or end up owing, you'll either recieve this refund now or your tax liability will be reduced by the amount of the credit. Clear as mud? Jeez, now I sound like the H&R Block commercial... I'm the taxman, whoa whoa...
posted by AstroGuy at 11:13 PM on February 22, 2002

Does every country do this? I just hit a moment of revelation reading this thread, which no doubt everyone else will look at and go "duh."

If the government was really for the people, it'd be like a charity organization like say public radio. If you like what the organization is doing, you donate what you can afford. However, it doesn't work that way. Why? Cuz it's a lie. It's all a lie. Civil servants don't work for us. We are forced to pay them the priviledge of working for ourselves. Instead, we get taxed. It's not a payment made of one's own volition. It's a requirement, and if you choose not to pay your tax you are penalized for it.

So basically, tax is payment for the right to be an American, which is something that can't be taken from me. I mean I was born an American, so I'm paying the government to live on this soil and be what I already am. To drive on the roads they so kindly made for me. To be protected by overworked and underpaid guys with guns who would throw me on the hood of a car and slap handcuffs on me at the slightest sign of provocation. [sarcasm] I feel so loved. [/sarcasm]

I didn't get the rebate. Student loan. I never saw it. However, I bet they'll make me pay it back anyway, even though the check never touched my hands. Bastards. No taxation without representation? Bollocks. In 225 years, we Americans are right back where we were when we were just colonists.
posted by ZachsMind at 5:10 PM on February 23, 2002

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