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Tax Policy Center Estimates Show Fewer Than 60% of Working Households Benefit Fully From President’s Tax Rebate

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Publication Date: January 2008

Publisher(s): Center on Budget and Policy Priorities (Washington, D.C.)

Author(s): Aviva Aron-Dine

Special Collection: John D. and Catherine T. MacArthur Foundation

Topic: Banking and finance (Taxation and tax policy)
Economics (Economic policy, planning, and development)

Keywords: Economic projections; Recession; Tax code; Income diversity

Type: Report

Abstract:

The centerpiece of the President’s economic stimulus proposal reportedly is a tax rebate that would be provided by temporarily reducing the 10 percent income tax rate to zero. The plan has been described as featuring a rebate of $800 for individuals and $1,600 for couples. This description, however, is misleading. Only those filers with incomes high enough to put them in the 15 percent tax bracket or a higher tax bracket could qualify for the full rebate, while most low- and moderate-income households would receive no rebate at all. This approach would not only deny help to the individuals hardest hit by a weakening economy; it would also make the rebate considerably less effective than it could be as economic stimulus.