From the Hightower Lowdown in the Austin Chronicle:
Question: What kind of tax “cut” actually will leave you owing more money to the IRS next April?
Answer: George W. Bush’s widely-ballyhooed, supercalifragilisticexpialidocious, $300 tax rebate. Bush spent several million of our tax dollars on prenotification letters mailed to eligible households, telling people what a big favor he had done for “America’s working families,” and that they should expect a check soon.
Next he flew around the country at our expense to hold photo-op press conferences where he handed out blown-up mock checks of $300 to people, like he was some sort of big, pink, Easter Bunny delivering free candy to everyone. Then the actual checks were mailed, only the Treasury was short of cash due to the economic downturn we’re experiencing under Bush, so George had to borrow $28 billion from the Social Security trust fund to cover his shameless political ploy.
But the biggest surprise for many Americans will be their discovery that Bush’s $300 checks are a classic case of what the Libertarian Party has dubbed “rebate and switch.” The checks we’re now getting from the IRS are not a rebate on taxes we’ve already paid, but an advance on any refund we expect to get from the IRS after we file our tax returns next April. Let’s say, for simplicity’s sake, that you’re due to get a refund of $300 next year. Instead, though, you’ll get zero, since IRS will deduct that $300 Smiling George mailed to you this summer from any refund you’re due next year.
This is because Bush’s “rebates” are a bookkeeping gimmick. Despite the hoopla, he didn’t lower anyone’s tax rates this year, so we still owe the same, including the $300 he “advanced” us this summer.
Bush giveth … then he taketh away.