The logical fallacy of tax rebates... or... W thinks you're stupid.

Uncle George and His Ragtime Band have found it in their hearts to "give" every taxpayer in America $300-$1200 to use as he or she pleases this summer to jump start the slumping economy. While most Americans would jump up and shout "woot!" at this, I'm afraid I'm going to have to give a solid "aw, man...not this shit again".

Let's flash back to 2002. 9/11 had become the scapegoat for all of the country's woes, and the economy was in the toilet. So someone up on high said, "giv'em some cash and they'll blow in on
ipods! That'll stimulate the economy!"
I was 20-something and single, and like most other Americans, I cashed my $300 check, pranced through the enchanted forest of $299.99 sales at Best Buy, CompUSA, and Sears, and exchanged my freebie-funds for a dose of instant gratification. I don't even remember what I bought, but it was probably either electronics or a tool of some kind. Regardless, I did my part as a faithful consumer and fed that money back into the cogs and sprockets of the struggling economy. The stimulus package seemed to have worked, though whether by correlation or causation is debatable. The government was happy, the retailers were happy, and the populace was happy; until tax season arrived.

In early February, there I was typing and clicking away at my copy of Turbo Tax and watching my estimated refund total climbing in the upper left corner of the screen with visions of what wonderful techno toys I would blow this money on in my head, when I spotted a markedly disturbing question on the screen:

DID YOU RECEIVE A TAX REBATE CHECK?

Um, huh? Wha? I could tell this was bad news. I checked the "yes" box, hit next, and watched in horror as my happy green refund in the corner morphed into the angry red demon of tax liability. I owed money to the IRS.

You see, that freebie cash that Unky-Dub sent me wasn't really free. It was a loan against my estimated tax refund for the current year. It was MY MONEY ALL ALONG. I had been tricked into blowing my hard earned cash on things I didn't need and probably wouldn't have bought otherwise, just to keep Wall Street in the black. W thought I was stupid, and he was right. Now he's trying to do it again.

Flash forward to 2008. I'm now six years older, a little wiser, and in debt. Manageably so, but in debt none the less. I have a wife, a mortgage, car payments, and student loans. The American dream, it seems. My wife and I will be receiving another $1200 from Dub in May, or $600 a piece if we had been single. This time around, the economy is in far worse shape than it was six years ago and the purchasing power of this $600 is not much better than the $300 was in 2002. The biggest difference in the economy now versus the economy then is the amount of debt. In the last six years Americans have been guzzling debt down like a frat boy doing a keg stand and it's coming back to bite us. And this time the rebate check won't help. Why? Let's look at what I believe most Americans' responses will be:

1: Lesson learned. Ha ha, very funny. You tricked me into spending my own money. Not again.

2: Paying down Debt. This $1200 might buy a nice plasma screen, but my old TV is still fine. I think I'll just pay off the credit card balance, since I've been paying for my old TV for 4 years now.

3: Saving. I'm okay right now, but the economy sucks and I might just need that money later, so I'll stick it in the bank and make some interest off of it.

And then of course there will always be the groups who go with #4:

4: WOOT! FREE MONEY LET'S BUY US A PLASMA TV!!!

Unky Dub is depending on #4.


If this tax rebate scheme doesn't work, the economy will worsen. I don't pretend to know exactly what will happen then, but rest assured that it will in some way involve you spending your money to make someone else rich, because W thinks you're stupid enough to do it.