Null Sum Game

Share

Unlike many other Americans, I will not be drooling this evening in anticipation of the president's speech. While he touts the "stimulus bill" for its tax cuts, the real effect of the tax cuts will be minimal, for a myriad of reasons.

If you qualify for the Making Work Pay credit of $400 a year, don't get too excited. It won't come until May, and divided equally will amount to an extra $25/month, if you qualify for it of course. I happen to not qualify, so I won't even get that much money.

If you're counting on the home incentive, remember that if you buy the home this year, you can't claim the credit until you file your taxes in 2010, meaning that it's at least a year away before you get that money.

Even more amazing, is this admission by Yahoo Finance which says:

Of course what filers' save on their federal taxes under stimulus may be muted by the fact that their cities and states -- facing steep budget shortfalls that will be lessened but not eliminated by stimulus funding -- may end up raising taxes and fees.

Exactly. In order to pay for these credits, they have to make up the difference somewhere else, meaning that states and municipalities will be raising taxes. My state legislature, under Barbara Buckley (D) is already talking about higher taxes to alleviate the budget shortfall, while Governor Gibbons (R) is asking the state employees to cut expenditures, take pay cuts, and go on voluntary furlough.

Government, like all entropic entities, always increases. So, don't be in too big of a hurry to spend that windfall refund- some other government official will soon exact it of you.