Could this really be true….yes, but not so fast! What is this and what is all the rage about? The main question is how bad is this going to be for the economy in the long run? The economic stimulus payment will be received by more than 130 million households; and this money won’t be taxable and won’t have an effect on your 2008 return. The stimulus package will send critical relief to millions of lower to middle income families whose economic situation dictates that they spend the rebate check and purchase goods and services to spur our economy. So who is eligible? The majority of people that filed a 2007 tax return; you just have to have a social security number and made at least 3,000.00 dollars in 2007 and not more than 75,0000.00 filing single and 150,000.00 filing jointly.
So where is all this money coming from? Option 1; if it comes from taxes, the value of a person’s stimulus check is offset by the greater taxes paid by another person or business, who will then have less money to reinvest or spend. Option 2; if the money is borrowed by Uncle Sam to pay for all the stimulus checks the borrowing takes money out of the private sector. Option 3; for the Federal Reserve to create money, well we all know that outcome will lead to inflation. None of these option seem like a good way to go…Spending power is not so much the meat of economic growth, but the key to economic growth is investment that raises workers productivity.