Hartford on Tax Rebates

Economist Tim Hartford has now also came out against the tax rebates. Stating as I have said on here over and over that it is a tax on the future. There is no such thing as free money. Even if we weren’t in a deficit and it was a straight tax rebate, money would be lost in the processing of the rebate itself. That has inefficiencies written all over it.

My favorite part of his article:

“Who should celebrate? Not the typical taxpayer, that is for sure. The tax cut makes no difference to her. Say her rebate check is $600; if she had wanted an extra $600 right now, she could already have it in her pocket, either by borrowing the money or by withdrawing it from savings. If she did that, of course, she would later have to pay $600 back plus interest. But that is exactly what some future administration will be demanding to repay government debt. Or, to look at it another way, the rational taxpayer should save the $600 windfall now, keeping it to pay the higher taxes that are surely on the horizon.”

The rest is here.

This is my two part take on what I think of most stimulus packages… I and II

I compare it to the Phillips Curve and the idea of a short-term stimulus. With further review it should be noted that this stimulus isn’t even a short-term stimulus.


Published in: on June 1, 2008 at 12:15 am  Comments (1)  

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One CommentLeave a comment

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