Will the proposed tax rebate stimulate the economy?

The new economic stimulus package proposed by President Bush and agreed on by the House would give taxpayers a rebate check. It would also allow home buyers more opportunity to refinance or purchase a house that is secured by Fannie Mae and Freddie Mac.

What has been proposed? 

The proposed tax credit for individuals who make less than $75,000 annually is $600, and $1,200 for married couples who make less than $150,000 combined gross income. Those who have children would also get an additional $300 per child.

Loan limits on loans that Fannie Mae and Freddie Mac could acquire would be raised from $417,000 to $625,500.

Who will benefit?

Individuals who pay a Social Security benefit and do not make more than $75,000 should receive some monetary rebate. The biggest demographic to receive a rebate will be married couples with children whose combined gross income does not exceed $150,000.

Will it dig us deeper?

Will these rebate checks be spent on paying down bills? Will it be put toward more purchases? Where will the money be to bail out consumers then? Who will shoulder the increased deficit as a result of the tax relief?

In regard to the housing assistance, will raising loan limits assist homeowners and borrowers? In high-value housing markets such as California, New York and Hawaii, will the increase be enough to help home borrowers purchase houses in their local markets? Will homeowners be able to get the refinancing assistance they may not have had before the increase in loan limits?

Connect2Agent would like you to weigh in on the economic stimulus package. Please let us know how you feel about this proposed bill by commenting below.

Posted by Rebecca D. Levinson

Comments

[Christine]

I definitely think it will help, but not enough to get the US out of the financial mess its in. Not in the long term. Of course it will be money people will spend, but really $600 dosen't go that far for many people. That dosen't even cover a months rent or a house payment. For the many millions of people going into foreclosure, or who have lost their job, I don't think its enough to help them. I think most people will use it to catch up on bills, so it will help for a month, but then most people will be right back in the same situation of trying to make ends meet. I think most people will use it for important things like house payments, increasing electric and gas bills etc... The people who are struggling with house payments will put the money towards that, but it won't be enough to get them back on their feet. With all the bad loans lenders gave to people who can't afford them, $600 or even $1200 isn't going to save them. But let's hope it does help!!!