Change you can count on

x 12 = $22

$22. That's the change we can count on first from Barack Obama if he has his way with his nearly $1 Trillion USD economic plan. The plan dubbed the "American Recovery and Investment Act" is intended to boost the economy, stave off disaster, and move America beyond the woes of 2008. According to the information released on the plan yesterday we now know that at least $300 billion of the enormous package will be devoted to tax relief. More specifically, details about this relief show that the Obama plan intends to avoid issuing rebate checks again by including a provision called "Making Work Pay" in an attempt to give this tax cut to"working people making less than $200,000". Also, according to the release the cut will come in the form of a $500 tax credit for singles and $1,000 tax credit for families (I'll assume this means joint filers?). Obama has further indicated that individuals who do not earn enough income to pay federal taxes will receive a check to reimburse them for paid in social security and medicare payroll taxes at the end of the year. To read the full details of this plan the New York times has a good summary which can be found here.

So what does that mean for you? I'll assume that if you are reading this blog you probably pay federal income taxes so a reimbursement check at the end of the year is out for you. So by default you get the tax credit.

If you are single that equates to: $500/ 12 months/ bi-annual paychecks or $22

If you are a joint filer $1,000/ 12 months/ bi-annual paychecks or $44

Now stand up out of your chair and sing this song

Happy Happy Joy Joy Indeed.

Now I suppose I should say before continuing that I like some portions of Mr. Obama's plan. More specifically, I like that the remainder of the money identified for use is intended to be spent on rebuilding roads as well as bridges, investing in new broadband internet technology, making medical records electronic, school rebuilding, and making the country more energy efficient. I don't necessarily get on board with the electronic medical records, but the other stuff will be a better use of tax payer money than spending more on specific industry bailouts. That being said spending $300 Billion dollars to give less than $50 dollars a month back to only employed workers is stupid.

The irony here to me is that the Obama team has expressed disdain for the Bush administrations distribution of rebate checks in prior rounds of national stimuli. To address this criticism, team Obama will not use what they call the equivalent of an economic "sugar rush" (to quote directly) by issuing a rebate check. So rather than issue a check to every tax filer from 2007 as Bush did; Obama through the use of the "Making Work Pay" plan will give workers money back through tax credits. But the most ironic thing to me is that this adjustment will actually be worse than the Bush checks (if that is even possible) because these credits are only available to "working" people while unemployment is near an all time high. Frankly both idea's are skunks and no matter how you dress them up they'll always stink.

So rather than tax cuts for the masses, what I'd prefer is that the $300 Billion be spent on shutting down the IRS and reforming our tax system entirely. Our country needs a massive tax over haul and simplification to eliminate wasteful GLOBAL spending on compliance and enforcement. Then after we shut down the IRS we'd need to re-educate those involved in tax planning, preparation, and enforcement who may be newly out of work; I'd guess the $300 billion could do it since according to the tax foundation (link above) we spent $305 BILLION on tax compliance in 2007. So in re-educating these workers the money could be sent to our suffering Universities and effectively invest in our future twice. Unfortunately though, the government will never realize this, will keep handing the American people skunks, and that's about the only thing you can count on.