Congress Plans Stimulus to Slow Economic Growth
When Jim Haughey says, “Many of you will get little if any rebate”, it is only true if many of you earn more than $174,000, the phase-out limit for the program. A couple with income of, say, $145,000 would get the maximum rebate of $1,200 plus $300 per child.
In addition, his description of the rebate program as “taking taxes paid by wealthier people and mailing out check [sic] to people who paid little if any taxes” is also inaccurate. The more taxes you pay, the higher your rebate, up to the phase-out limit. Someone who earned $9,000 and paid no taxes would only qualify for a $300 rebate.
That fact also calls into question his statement that “The major impact of the rebates will be at the low end of the market”. The low end of the market is where the rebates are the lowest.
How can Mr. Haughey seriously think that this rebate is going to improve consumer confidence? The unemployment rate has risen to 5% from 4.4% a year ago. Are people going to buy a new house when they see their neighbors losing their jobs and they fear losing their own?
The Conference Board Consumer Confidence Index reports that consumers’ “assessment of the job market, while slightly less negative than in December, is more negative than a year ago. Looking ahead, consumers are quite downbeat about the short-term future and a greater proportion expect business conditions and employment to deteriorate further in the months ahead.” Is a rebate likely to change that perception if unemployment continues to rise?
The construction industry will get a boost at midyear from the $150 billion economic stimulus package that Congress is now debating, if the stimulus package is enacted. It will include accelerated depreciation for capital investment, possibly tax loss carry backs for unprofitable firms to recoup earlier income tax payments from the boom years and personal “tax rebate” checks in the late spring and summer that could be as high as several thousand dollars for working families with several children.