February 25, 2008 - Back to Monday. It went by quick. Work, then the gym, then dinner, then band practice, then back home to end the day. I had a long phone call to LeAnne today. We talked about the "Flat Screen For America Fund", also known as 2008 Federal Tax Relief. She was really confused about the money that she was getting. It hasn't been very clearly written about in the media. They keep throwing around $300 to $600 numbers, and saying that it somehow applies towards your 2008 taxes but you get the money in 2007. The problem for LeAnne was that she was thinking about what she typically gets back every year, and thought it was going to cut into that for next year. If she normally gets $300 or so every year, and the government sends her a check for $600, then next year she figures she will owe $300. But that's not how this works at all. See, there are two sides to the situation. First, tax payers are all going to benefit. The majority of taxpayers will get exactly $600, in addition to, and at a separate time from our regular tax return. Some people who barely make any money (less than $5,000 a year) will only get $300, and some people who make ridiculous amounts of money (somewhere around $120,000 or more a year) will get less than $600, on a sliding scale with less relief for every dollar more they make a year. Parents will get an extra $300 per kid. Of course if you don't pay taxes, you don't get anything from the government. But there is another side to the story, the one not told as clearly. The government ran some calculations, and saw projections that this year was probably going to result in near 0% economic growth. This would be a tragedy because it shows economic weakness, and it could possibly send the US into a recession, or further weaken our international standing. So they did some math and figured that to get the ideal 3% growth they like seeing every year, they need to put $600 in everyone's pockets. And they want us to go out and spend it. If their calculations work out, and people spend the money at the rate they project, then the economy grows exactly as they would like, and everyone is happy. But wait, there's more. When I go out and buy the flat screen TV the government is sending me a check to buy, I'm paying taxes on that purchase. The company who sold the TV will pay taxes on their earnings. I'm going possibly need to rent a truck to get it to my house, and have to pay another business more money, which they will be taxed on, and it will send ripples through the economy. What this means is that the $600 that I was given will probably instantly return about $150 back to the government through taxes, and over the long run will spur economic growth (rather than the projected stagnation) propelling this country forward! Genius! But did politicians really think of this? I don't think so. Special interest groups, realizing that if they could keep the economy growing rather than stalling, stand to benefit greatly. Senior executives with big time bonuses tied to their companies bottom lines stand to make millions if the economy is roaring rather than wallowing. So what looks like a $600 check for me is really a million dollar check for executives at big companies. And I guess it is all ok with me, as long as I get that free big screen TV.