The stimulus plan includes tax rebates.
Under the plan, individuals would receive up to $500 and families up to $1,000. The money would be delivered through paychecks as a reduction in Social Security withholdings, and is intended to bolster consumer spending by giving a small lift to household pocketbooks.
Well, what about those of us who are self-employed and get no paychecks? And what about those of us who are currently unemployed and get no paychecks?
If I can think of that, I hope the vaunted Obama economic team has somebody on it who also thinks of it. When there are 500,000 people a month losing paychecks, that rebate can't be distributed to them that way. And sole proprietors typically don't issue themselves paychecks; they take a draw and pay quarterly estimated taxes. There are no FICA/Medicare withholdings from those.
Posted by Linkmeister at January 16, 2009 12:01 AM | TrackBackI also wonder about reducing the Social Security withholding. We keep hearing about how Social Security is about to go bankrupt, so they plan to reduce the amount of money coming in? Why not reduce FICA withholdings?
Selfishly, I wonder how they define family. Is it two wage earners? Is it me and my young child?
All this in addition to your excellent point about those who don't get paychecks.
Posted by: Juli Thompson at January 16, 2009 08:00 AMI would think "family" would be those who claim "head of household" status, although that one's tricky.
You only hear that SocSec is going bankrupt from people who want to reduce/kill it. In point of fact it's solvent through 2035 or thereabouts. It's Medicare that needs an infusion.
Posted by: Linkmeister at January 16, 2009 08:52 AMI don't quite understand the spending stimulus proposed by Barack Obama - I'm self-employed but because my income is reported via a 1099, without the benefits (or the requirements) of self-employment...so it seems that I will not benefit from the social security "refund" unless somehow it can be attached to my husband's paycheck. Additionally, I don't see how will the $10-$20 ss withholding reduction per check will really turn into an incentive to spend? I don't think we would even notice all that extra money in the check. Please Linky...dig into your bag of tricks and explain this to me.
Posted by: Karan at January 16, 2009 09:59 AMWell, yeah. All my income for the past ten years has been reported on 1099s too, and I've had to fill out Schedule SE and pay both employer and employee shares of FICA/Medicare. Which hurts.
And I dunno. An extra $10-$20 in a check every month is more likely to be spent than saved, at least based on my own experience with small raises when I was working for wages. An extra $50 I automatically diverted into my savings as though I'd never seen it, but $10? Nah.
Posted by: Linkmeister at January 16, 2009 10:07 AMLink wrote that "An extra $10-$20 in a check every month is more likely to be spent than saved"
He is exactly right.
The economists are concerned that lump sum payouts of the tax cut will be used by consumers to pay down their personal debt, or saved .. instead of incrementally increasing their consumption.
Spend, baby, spend.
(unless you are a bank that received billions in bailout bux .. then just hoard the loot.)
Posted by: pixelshim at January 18, 2009 07:31 AM