Refund @ MindSay

By Congressman Emanuel Cleaver, II D-MO

Yesterday, the House and Senate agreed overwhelmingly to pass bipartisan legislation to provide a quick boost to a struggling economy. With a unanimous vote, we sent the stimulus package to the President, who has already agreed to sign it into law.

The centerpiece of this legislation is a direct tax rebate to individuals of up to $600 and households up to $1200. Over 2 million Missouri households will receive refunds averaging $913. These rebates, however, are very unique. For the first time in our history the poorest of the poor will be targeted to receive rebates. Previous stimulus packages only went to those who owed taxes last year. Many of the poor, those on fixed income or living on social security or disability do not normally owe taxes. This package is different. Rebates will be phased out as income increase.

I am very pleased to have been part of the group to argue vigorously that any stimulus package had to be directed at lower income levels. I believe we injected some fundamental fairness into what could have been an upper class money maker.

Right now, targeting our nation's poor is critical, because they are feeling the economic downturn far more than anyone else in the nation. Last year, the price of food rose nearly five percent, but real weekly earnings rose under one percent for the year. I'm just a Methodist preacher, but when prices are up nearly five percent and earnings are barely up one percent, it means the money you earn isn't going as far as it used to. For those only earning a bare minimum wage, their paychecks are not going far at all.

The stimulus package will cost $168 billion. Yes billion with a "B." While I am extremely concerned about borrowing more money, frankly our economy desperately needs the jolt. Without this drastic measure, the world's economic health is in peril.

Many of you have heard me speak on the dangers of our government's spending and how terrible our deficit has grown. Some may be asking, "Why is this different?" Just like each of our personal budgets, our nation has good debt and bad debt. Good debt is borrowing for a house or college, things that have long term beneficial effects. Bad debt is borrowing money to buy a Big Mac. This stimulus package is "good debt." It provides a way to help shallow out the economic downturn which is a sound and positive investment in our future. By making it lean and aggressive, Congress, for once, resisted the urge to make a spending bill a fast food feast.

The bottom line is this package will put hundreds of dollars into the hands of more than 130 million American families including seniors and disabled veterans - who will spend it and help reinvigorate the economy. It will help struggling families by offering a rebate of $300 for each child and will expand financing opportunities for Americans in danger of losing their homes because of the mortgage crisis. This $168 billion federal investment in the economy is projected to create 500,000 jobs by the end of the year.

I believe this stimulus package will help, but it will not be the magic pill that cures our ailing economy. To be perfectly honest, we may be too late to pull completely out of what, hopefully, will be only a mild recession. Our economy has been neglected and abused over the last seven years, but I applaud Speaker Pelosi, Chairman Charlie Rangel of the Ways and Means Committee, Senate Leaders and the President for making this effort in good faith. Let us all hope it has the desired effect.

Many of you probably have questions regarding the stimulus package and how it will affect you. While it will be slightly different for every household, here are answers to some of the questions I hear most often.

Q: How much is the refund?

A: It depends on your income and tax liability, but it ranges from $300 to $600 for individuals and from $600 to $1,200 for married couples filing jointly.

Anyone eligible for a refund would receive an additional $300 for each child 17 or younger who lived with them for more than half of 2007.

For example, a married couple with two children could receive up to $1,800. There is no limit on the number of children who could earn their parents a refund.

A worksheet from the Treasury Department with various examples of different family situations can be found on my website www.house.gov/cleaver. Simply click on the link marked "Stimulus Package."

Q: Who is eligible for a refund?

A: A minimum of $3,000 in earned income in 2007 is required, even if no federal income tax was paid. Earned income means income from a job or self-employment. The refund phases out for higher-income taxpayers.

To get a refund, you must file a 2007 tax return, even if you don't owe tax, so the IRS can know where to send your check.
If you had no earned income but you paid taxes - perhaps on Social Security or pension benefits or investment income - you could receive a refund of your 2007 tax liability up to $600 (single) or $1,200 (married).

If you had no earned income and no tax liability in 2007, you would get no refund. However, more than 20 million senior citizens living off Social Security -- as well as about 250,000 disabled veterans and spouses of deceased disabled veterans - WILL BE ELIGIBLE for the rebate checks.

Q: At what income level does the refund phase out?

A: Singles with more than $75,000 in adjusted gross income and couples with more than $150,000 would lose some or all of their refund. (Adjusted gross income includes income from all sources; it is usually the biggest line on your tax return.)

Q: When would we get checks?

A: Now that the bill has passed Congress, checks could start going out within 60 days of the President's signature and it would take about 10 weeks to send out the "lion's share."

Start looking for your check to arrive in the mail in May. Remember, you must file a 2007 tax return by April 15 to receive a stimulus refund.