BUSINESSWEEK ONLINE : FEBRUARY 19, 2001 ISSUE
ECONOMIC TRENDS Give Taxpayers a $250 Rebate One proposal to boost the economy Looking for the quickest way to inject money into the stalling economy? Give taxpayers a rebate. That's the suggestion of economist William G. Gale of the Brookings Institution. And the idea is now being considered by leading members of Congress, including Senate Minority Leader Tom Daschle (D-S.D.). Gale proposes a one-time individual rebate of $250. He estimates it would return about $44 billion of the taxes collected in 2000. A cut this size would keep the Social Security and Medicare surpluses intact--and leave an additional budget surplus of $13 billion. Daschle likes the rebate because it gives tax relief without skewing its benefits toward the rich, who are less vulnerable to the pinch of the slowing economy. High-income families are also the least likely to spend the rebate--and spending is essential for a tax break to work as an economic stimulus, says Gale. However, don't think of this as a liberal idea. A rebate was enacted to spur the economy as part of a tax-cut package in 1975, when Gerald R. Ford was President and current Vice-President Richard B. Cheney and Federal Reserve Chairman Alan Greenspan were his senior advisers. That rebate, which boosted the economy at the time, totaled $8 billion--equivalent, as a fraction of the overall economy, to the plan Gale is proposing. By Charles J. Whalen _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					INTERACT E-Mail to Business Week Online

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