Today’s big debate about the size of stimulus checks has a number of similarities to the debates that surround any other program that spends government money. Almost every single fucking government aid program is delivered as a tax credit, or is means tested, or has some other baroque mechanism attached to it to make sure that someone with “too much money” doesn’t benefit from the program. It seems like our policymakers believe that it’s almost as big a tragedy for someone undeserving to get a dollar from the government as it is for someone else to starve to death for lack of a government dollar. And don’t get me started on tax free health savings accounts and other bets that you have to make on how sick you’re going to get this year in order to use your own pre-tax money to pay for costly healthcare.
Here’s the thing: the simple remedy for any “overpayment” of government assistance is taxation. If I make too much money to “deserve” a $2,000 stimulus check, tax it back. If someone gets food stamps but they made $150K last year, tax it back. Instead of attaching some kind of one-off means test to every government program, thus making each of them overly complicated and less likely to help the target population, just track the handouts from each program and trust that next year’s taxes will settle accounts.
Why doesn’t this happen? I can think of a couple of reasons. First, taxes are politically radioactive and no politician wants to be accused of “raising taxes” even though taxing back a gain that a means-tested program wouldn’t have given you in the first place isn’t “raising taxes”. Second, people are addicted to tax returns, a.k.a giving an interest-free loan to Uncle Sam and getting it back in a check, and taxing back programs would lessen returns, or maybe you’d even owe money on April 15. Third, nobody trusts that taxes are collected fairly and equitably. Fourth, removing the discussion about “deserving poor” from debates over government programs would probably mean that more government money would be distributed, which so-called “conservatives” and some “moderates” wouldn’t like.
Anyway, this is my brilliant and sophisticated policy post of the year. (/s) Just stop worrying about who deserves what, hand out the money, and tax it back later if someone got too much.
(Also, I understand that part of the stimulus debate is based on the fact that higher income folks don’t spend the check, but so what, since we’re going to tax it back anyway.)
On The Road – ?BillinGlendaleCA – Lake Hollywood
TheOtherHank
I would say that the people making these decisions are much more afraid of someone “undeserving” getting some benefit than they are of a “deserving” person not getting it.
Also, there just aren’t that many undeserving people as compared to the numbers of the deserving. Sending them all the benefit they don’t deserve is just noise in the system. And probably costs less than it would to figure out who should actually get it. All that means testing needs to be done by someone, and they don’t work for free.
ETA: First!
azlib
Interestingly, our Covid-19 stimulus check was reduced by about the amount of what we would have marginally paid in taxes on the full amount.
Jim, Foolish Literalist
Open thread: Big news as much for who introduced it as for it being introduced
Doug R
Yup. That’s what the whole SSN is about. In fact, the government could calculate your taxes for you and there are some governments that do it already-seeing as the government double checks your “calculations” anyway.
https://www.youtube.com/watch?v=vGVK4ibMI-Y
Cameron
I think the purpose of these discussions is to prevent any stimulus (except tax cuts, which generally aren’t very stimulating) from being adopted. After a while, the public stops listening to arguments over how many families living at less than 400% FPL can dance on the head of a pin, and gives up. So…all they’ll remember at election time is one party promised them something and didn’t deliver. And we know what happens next.
narya
I don’t want to have to owe money on April 15. I don’t get a huge refund, which is fine, but I do not want to have to come up with a couple hundred or a couple thousand dollars because I received a check I didn’t need. The ones from the past year were fine–they were adjusted appropriately, and, though I haven’t read all of the IRS docs thoroughly yet, they seem to have thought it through well enough. But I would rather the government keep the money, and use it on folks and programs who need it more than I do, rather than hand it to me then tax it back from me.
Nicole
I agree 100% and I don’t understand why the Democrats don’t come up with a catchphrase that doesn’t use the word “tax” to say this. I don’t hate “claw it back” but they could find something less aggressive I imagine. If media grouses, “but then these families will OWE TAXES” the Dems can reply, “the issue is that wealthier families who get this stimulus aren’t spending it. If they aren’t spending it, then they’ll still have it at tax time to pay back, since they didn’t need it.”
Also, in addition to critical thinking, it’d be great if schools could teach kids how taxes work and what they’re for.
The Thin Black Duke
artem1s
If the GOP won’t move on this, Dems should brand them something other than fiscally responsible. The GOP are being Scrooges/Potters and should be branded as such when they start haggling over the tiny bit of coal they will allow us to have. I’m fine with the Pro-Death Party but I’m sure someone more creative in branding could come up with much better phrase to tag them with.
JMS
Taxing back would be a nightmare. How many people upon getting “free” money would remember to save it because they have to pay it back. No, they’d get angry that the government tricked them and they spent the money already.
OzarkHillbilly
Every single person in the country other than me and mine is undeserving of govt largess. And yes, I mean you.
OzarkHillbilly
Feel the need to say that I do it every month. (eta: the saving money for taxes that is, not the getting of free money)
Omnes Omnibus
@The Thin Black Duke: Exactly. This fact that some couple earning $200,000 a year got a check for $2000 is not the problem here. The fact that multi-millionaires and billionaires are paying no more in taxes than the couple making $200,000 is.
pacem appellant
This is Atrios’s bailiwick. He’s been harping on this for ages. i think your (4) is actual number (1) and the only reason. The other three are post hoc justifications.
Four Seasons Total Landscaping mistermix
@JMS:
This is a legitimate concern but there are a couple of ways to get around it. You can let people pay off their taxes over a couple of years via payroll deductions. You can take a percentage of the next government handout. Just as people have internalized that it’s OK for Uncle Sam to have an interest-free loan (their tax return), they can learn this, too.
Enhanced Voting Techniques
@TheOtherHank: to repeat what he said, I though “underserviving” is code for “poor and not white”. I assume Totally NOT cowardly traitor bleach drinking REAL (and still NOT gay) America is all for giving money to rich whites.
DCrefugee
I have a handyman who helps out around my decadently large property, averaging two days a week. I pay him $15/hour, which is more than he makes from his other “clients.” He turned 65 today, is a Viet Nam-era U.S. Navy vet, and has had some medical/emotional problems over the years the exact details of which I’m not aware. He’s been receiving Social Security, disability and/or some other assistance for a couple of years. He’s worked for me off and on since 2010. He’s white, has a high-school education and has done manual labor all his life.
Until recently, I paid him in cash. A couple of years ago, he told me I could pay him by check, which he deposits into a commercial checking account. Recently, he asked for at least partial payment in cash again. It seems whichever agency provides his assistance mandated he allow them access to his checking account, to verify he doesn’t make more than some threshold.
This seems really stupid to me, as the expense of checking his account periodically far outweighs the “risk” of him making too much money, especially since he’s going to spend it almost immediately. It’s not like he’s saving up for a Ferrari.
It’s all of a piece, designed to ensure the “undeserving” among us don’t get real assistance, are prevented from even incremental success and, effectively, are punished for being poor.
Taxing the rich is only a start…
SiubhanDuinne
@Omnes Omnibus:
O/T, but if you weren’t already aware, Jennifer Granholm is testifying right now at her Energy confirmation hearing. No idea what her breakfast beverage was today.
https://youtu.be/_66Ir8gxFm4
Four Seasons Total Landscaping mistermix
@DCrefugee:
Most guys like this who do work around my place who are younger don’t care about cash or check. I realized that’s because they have a couple of kids and they’ll never make enough to have to pay $1 in tax.
VeniceRiley
IDK you could call it a grant/loan economic bounceback program. If you make over a certain amount in the year, you’re deemed to have bounced back and must repay this short term interest free loan , 100% or 50% as you no longer need the loan. If you’re still in trouble financially and make under, say, 60K, it’s a tax free grant.
Brachiator
What does this have to do with the recent or proposed stimulus program? Means testing was simple, based on the adjusted gross income of 2018 or 2019 tax returns. And the payments are not taxed, which makes them a more effective stimulus than deferred taxation.
Some critics, conservative and liberal, insist that the new stimulus should be targeted to those most affected by the current economic downturn. A recent WaPo article suggests that some “wealthier” people who got the prior stimulus should not have received anything because they saved the money instead of spent it. The “experts” cited in the story want to target the money to lower-income families only.
This is all just delay and jibber jabber. The current stimulus program is actually fairly simple and effective. Just get the damn money out.
Fair Economist
@Jim, Foolish Literalist:
One result of the failed insurrection is to make it abundantly clear that the safety of the country demands DC be a state so the DC National Guard is not under the control of the President. I think that’s going to warm up a lot of cold feet.
With the tax-back system, one option for upper middle class people who don’t want the inconvenience an interest-free loan from the government is to not consider it income if it wasn’t cashed. So shred it and forget it if it’s too much hassle to write a check in April 2022.
West of the Cascades
@Brachiator: This. “Taxing” higher income people a lot more is obviously what needs to be happening, but why “tax back” a stimulus check when there’s a simple mechanism to not pay out stimulus checks to high earners in the first place? (although from a political point of view, maybe set the threshold at $200,000 or something that makes millions of additional voters get another $1400 check from the Biden administration).
Brachiator
@Omnes Omnibus:
The AGI limit for married couples to receive a stimulus check is $150,000. I don’t think that a couple earning $200,000 would get even a small check.
Agree with you about taxes paid, or not paid, by billionaires.
Baud
Every covid stimulus check has been income capped, but at an income higher than $75K.
narya
@Fair Economist: The last two were deposited directly for many folks.
Omnes Omnibus
@Brachiator: I almost included a caveat that my numbers were for illustration purposes and not related to any existing program. FWIW it is also unlikely that anyone would get payment of exactly $2000. Pedants gotta pedant.
cain
@VeniceRiley:
It seems to me that the reason why govt seems so complicated is exactly this kind of mentality by conservatives. There seems to be nothing they touch that doesn’t turn to shit.
Baud
Interestingly, this isn’t exclusively a right wing problem. There was a lot of outraged commentary on some of the firms that benefitted from the PPP program.
MisterForkbeard
@Jim, Foolish Literalist: Is this big news because it’s from Biden’s former junior senator in Delaware? Or did I miss some other significance?
MisterForkbeard
@SiubhanDuinne: So…. is she “high energy” in her hearing?
burnspbesq
@DCrefugee:
I had a huge brawl with my now-ex over whether she was obligated to give a 1099 to the woman who cleaned our house twice a week. It didn’t happen. We never got penalized for not doing it. That kind of noncompliance is endemic, and it always will be.
And no, I’m not asking you to rat yourself out. That’s between you and Chuck (Rettig, not Schumer).
WereBear
@cain:
Because they don’t have a Generative mindset. They really don’t know how to make money from innovative ideas or stellar customer service or good products at a good price; such catchphrases from my not-so-long-ago youth.
They only know how to hoard, how to steal, how to con, and being the very best parasite they can be. From vulture capitalists like Mitt Romney, who looted companies like Caribbean pirates, to the dimmest MAGAt who barely tips the server, they are DE-Generative.
They can only take, not make.
Charluckles
I have had a disappointing number of people tell me that COVID is a hoax perpetrated by the super wealthy and corporations and you can tell because the wealthy have gotten significantly more wealthy during the pandemic. When I respond that we can address that relatively easy by taxing the holy heck out of them I am met with blank stares.
Brachiator
@West of the Cascades:
The income limit for receiving a stimulus check is $150,000 for joint filers and $75,000 for single filers.
But even some upper income people have fallen on relatively hard times and those who got a stimulus check probably felt some relief.
The stimulus program is actually fairly innovative. I think that one stimulus program during the Bush era actually provided for the payback of some rebate received.
And when you get down to it, the point is that these checks do not necessarily stimulate the economy. The real point could never be to stimulate spending since large sectors of the economy are still shut down. People do not have as many places or opportunities to spend money.
Too many economists and members of Congress have their heads up their ass over this.
These stimulus payments help people sustain themselves until we can actually get through this goddam pandemic. Whether people spend money, pay down debt or save money is all good. It is a down payment for the possibility of future prosperity as the economy recovers.
To this end, trying to target the money to those “most deserving” is stupid and counter-productive.
So too, would be the idea of giving more money to more people and taxing it back. A tax free stimulus rebate is a lot of bang for the buck, but it would be hideously expensive if you ladled out even more money.
Also, whether the government payments increase the deficit is also not supremely important.
As a compromise, I could see Biden lowering the threshold to $100,000 for a married couple, but if he resists this, I would have no problem with it.
laura
The stupid – it burns! I’ve heard several arguments that unless your financially strapped the emergency funds were not needed. Here’s the one that pissed me off the most: a double income early retired couple with multiple income sources including inherited wealth pissing and moaning about the waste in sending them a check while willfully blind to the adult daughter in college who’s struggling to cover expenses. Give her the money if you dont need it. Give it to a person, give it to a charity -.just fucking cir ulatenthose dollars in the economy today. It ain’t rocket surgery. Spouse and I sent half of our allotment to several food banks and aging out of foster care organizations that we give to on the regular.
Also, confiscatory tax rates to wring the idle capital out of the soft palms, the Bezos’ Gates’ et al and jack the estate tax to the heavens on high and start using them for the social good.
Jim, Foolish Literalist
@MisterForkbeard: Carper is historically, and quietly, on the moderate (to conservative) side of the caucus. I think his taking the lead on this is significant. I don’t really know what his relationship with Biden is.
SiubhanDuinne
@MisterForkbeard:
She seems quite perky, but from what I’ve seen it’s mostly senators holding forth for 4’45” and then Granholm says “Yes, I agree” or “I’d love to visit your state” or “I look forward to working with you on that.”
Have not watched the entire hearing.
Brachiator
@Omnes Omnibus:
It helps to talk about the actual program. Makes comparisons easier and more meaningful.
MisterForkbeard
@Charluckles: The super wealthy get richer in EVERY economic disruption. Because they have all the leverage and can concentrate wealth even more.
Geminid
@SiubhanDuinne: As head of the Department of Energy, Governor Granholm can do a lot of good work on the clean energy transition. Among other functions, the DOE also has an underfunded program for weatherizing houses and other buildings that woud be good to expand. There is a lot to be done, and Granholm is a smart, capable, experienced leader.
Ivan X
If you haven’t seen the cover of last week’s New Yorker, it’s pitch perfect. I don’t know how Barry Blitt (of Obama fist bump cover infamy) kills it every single time, but the guy is an underrecognized national treasure:
https://www.newyorker.com/culture/cover-story/cover-story-2021-01-25
I also read that issue’s report on the insurrection, and it is a harrowing, excellent work of first-person journalism, though I found its connecting of Trump to the rioters to be weaker than I would have liked (though it’s of course self evident to anyone with a half working brain who isn’t invested in seeing otherwise). Not behind paywall, I don’t think.
https://www.newyorker.com/magazine/2021/01/25/among-the-insurrectionists
Brachiator
@Doug R:
Grover Norquist (among others) fight to block the government from calculating people’s taxes. They also block “free file” programs.
I don’t have a copy of the story anymore, but the idea is to make some element of tax preparation painful and always in front of people. They think this makes it easier to always rail about high taxes and to get the public to back tax and budget cuts.
Ohio Mom
DCrefugee:
I don’t know the rules for SSDI but the ones for SSI (for people disabled before age 18, that’s what Ohio Son gets) are complicated and strict.
To give a simplified version, you are allowed to earn money, but for every two dollars you earn, one dollar of your SSI benefit is subtracted.
The real fun starts when your income varies each month — lots of arithmetic to keep track of, especially since your benefit payment is based on your reported income two months back (e.g., March SSI payment will be adjusted by what your January income was).
Also, your assets must be under $2,000 (there are a few ways to shelter savings but they are not for the unsophisticated. And don’t own a burial plot or burial Insurance, that’s held against the $2,000 limit).
I am under the impression that the SSDI rules are a bit more generous but still there are lots of land mines.
This is somewhat further afield, but when you get Medicaid, every single medical expense over the years is tracked, to tne penny, so it can be extracted/paid back from your estate (again, there are ways around this your can pay an attorney to set up).
So that $48.51 prescription Ohio Son picked up last week, on to the tally sheet it goes. Every now and again we get a spot audit in the mail: Please verify the charge for the prescription/doctor visit (on a date many months ago) was $xxx.xx.
The amount of financial monitoring the government does of people in safety net programs is vast. Always wonder what the ratio is of support provided vs. money spent on monitoring.
WaterGirl
@Fair Economist:
I don’t know anything about him. Why is this significant?
Brachiator
@Baud:
or has some other baroque mechanism attached to it to make sure that someone with “too much money” doesn’t benefit from the program
A lot of this outrage was because banks in charge of the program were giving priority to their preferred customers. The gatekeeping unfairly excluded businesses trying to get loans.
WaterGirl
@Brachiator: Really?
Felanius Kootea
Didn’t the first COVID relief package last year use information from people’s 2019 tax returns to determine eligibility? So if you made $200,000 in 2019, but got laid off because of COVID in 2020, you got nothing. Makes no sense to me.
Baud
@Brachiator:
That’s a separate criticism. There has also been complaints that certain businesses shouldn’t get money.
taumaturgo
The fathers of modern conservative thought before and during the French revolution – Burke, Maistre, and Hubble – all defended the rights of the monarchies as divinely inspired and the only true form of government. All three found repulsive the democracy the masses fought for. They postulated that people are fundamentally unequal, with the rich and powerful at the top divinely blessed and the undeserving, fiscally unresponsible masses at the bottom. Markets in all their wisdom shorts out wealth wisely to the fiscally responsible at the top, and under no circumstance they saw or approved of wealth trickling down to the poor and lazy. Sounds familiar? What do modern conservatives stand for? 1. Fiscal responsibility by the States and more importantly, individuals. 2. The defense and maintenance of social hierarchies and 3. the idea that people are fundamentally unequal. Mix and shake well the three points and outcomes trickle-down economies, the idea that poor working folks are lazy and undeserving, and if they only educated themselves they too could have a shot at a better station in life; meritocracy. No amount of stimulus will help these folks, instead, they should stop winning and start working to prove their mettle, anything else is a waste of treasure. The more things change the more they remain the same.
Brachiator
@Baud:
Wasn’t this related to the bank favoritism? I never saw much that suggested that as a matter of policy certain businesses should be excluded from the PPP program.
Maybe I just missed it.
SiubhanDuinne
@Geminid:
I don’t disagree at all. I admire her very much. My comment was more an observation that Senators love to hold forth at great length, and then when their time has nearly expired they ask the nominee for response and she has no time to say much more than “I agree” or “I’d love to.”
Also, Omnes has had a (most understandable) crush on her for a long time, so I was just teasing him a little bit :-)
Brachiator
@Felanius Kootea:
They had to use 2018 and 2019 income in order to get the payments out fast. Otherwise, you might have needed a slower program where people had to apply for the rebate.
There is some provision to allow people whose incomes fell a great deal to qualify for a rebate on their 2020 tax returns. This is all part of the Recovery Rebate Worksheet.
There are also provisions to let people use their 2019 earned income and self-employment income to qualify for certain credits if their 2020 income is very low.
So, for example, a couple or single parent who totally unemployed in 2020 can still qualify for the Earned Income Tax Credit using 2019 earned income.
Some of this is complicated, maybe even overly so, but some elements are actually well thought out and try to provide additional support for people who have been hurt by the pandemic.
JaneE
There are several easier and simpler ways to handle poverty in this country. We will never do any of them, at least so long as a good third of the people believe that poverty is a choice and the people in poverty could do something themselves to change their state.
A guaranteed minimum income could work, or a state provided set of minimum benefits for medical care, food, and housing to keep people alive if nothing else. Even the most basic of safety nets in this country is met with opposition from the people who think poor people should suffer – almost without limit – but rich people cannot be allowed to suffer the slightest inconvenience. That is a moral failure of this country, and the majority who allow a sadistic minority to control the purse-strings.
Geminid
@SiubhanDuinne: I was just responding to your first Granholm comment. The account of the hearing reminded me that my list of Granholm qualities left out “savvy politican”
Felanius Kootea
@Brachiator: I understand what you’re saying but someone who went from $200,000 in 2019 to whatever unemployment pays in 2020 probably needs help right away, not at tax filing time a year later. I think a hybrid approach (look at old tax returns but let people submit proof of currently being laid off) would have been ideal but probably a lot more complex to manage.
Felanius Kootea
@JaneE:
I completely agree with this.
Wapiti
@MisterForkbeard: It was an eye-opener to me when I read Picketty’s book: he shows that wealth inequality in the US persisted through the Depression. WWII, though, caused significant lessening of inequality.
WaterGirl
@SiubhanDuinne: I took your original comment as a PSA for Omnes.
ian
@Baud: Paying extra wealthy corporations large sums from the small business administration does not equal giving a 600 check to people who don’t need it. The outrage may seem similar in nature, but the motivation for the outrage is very different.
Ohio Mom
JaneE:
That is what we provide for disabled people, the barest minimum for life’s necessities.
I always assume that is because most everyone agrees disabled people don’t “deserve” their limitations — even those who think poor people obviously deserve their poverty.
And still we make the system for getting this support as arduous as possible. Some of us as individuals are exceptions but overall, we are a mean, cruel culture.
frosty
My first stimulus check was less than the stated amount because my income was higher than some basic level, per the previous year’s tax return. So already means tested. What’s the big deal, just do it again the same way.
Brachiator
@Felanius Kootea:
Good points. Yeah, a hybrid system might be good in the future, but we don’t have anything like it at present.
But again, the present stimulus programs, supplemented by enhance unemployment compensation, were pretty fast in getting relief out.
Matt
And that’s the GOOD ones. The average Republican doesn’t think the latter is a tragedy at all, it’s spank-bank material.
Edmund Dantes
@Felanius Kootea: no no. Must listen to our betters that was smart to just use the old. Cause peoples lives don’t change and hey you should have been smarter.
plus we want you to be mad that your friend down the street is getting helped but you made a little too much so you don’t get it.
its fucking stupid on all fronts.
Brachiator
@Felanius Kootea:
I also wanted to throw in that the pandemic complicated things.
A program where people had to apply for aid (as opposed to using tax returns) means that people would have to use computers or make phone calls or mail applications. And since even government agencies had to reduce operations because of the pandemic, this would have meant more delays.
In California, the unemployment system ground down to a halt because they could not process all the claims.
And even the processing of the second stimulus rebate was patchy in places because of implementation problems.
LongHairedWeirdo
Such a *terrible* thing, loaning money to the GOVERNMENT! THE GOVERNMENT! And without the 0.1% interest you’d get from a savings account. Such a LOSS for the person who gets a $500 check. Their average money-lended is $250, and one tenth of one percent of that is 25 cents! Don’t give THE GOVERNMENT 25 cents of your hard earned, just because you ENJOY getting a small bit of cash all at once.
Sorry – the “interest free loan” is a pet peeve of mine. For the people who like tax returns, the financial hit is usually tiny, and more than worth it to people just getting by, where the extra $10 a week would get spent on something “necessary”, but the $500 tax return means they get to spend on something bigger, and more important, than they can easily spend during the rest of the year.
If a person pays off $500 of an 18% credit card, that gain overwhelms the losses of that “interest free loan”. And, again, paying an extra $10 a month on the credit card probably will get nibbled to death by the proverbial ducks.
Cathie from Canada
The way that Canada got its support program going within 3 weeks last spring was exactly because the Liberal government didn’t means-test, etc, but just sent money to everyone who applied. Thank God it was the Liberals in power when this epidemic happened – there is no way the Conservatives ever would have got this money out the door as quickly.
When those $2,000 CERB cheques started hitting bank accounts, so people could stay home and still buy groceries and pay their bills, you could almost feel the whole country relax and decide to deal.
You should have heard the pearl-clutching from the Conservatives, but basically most people “self-selected’ and didn’t apply for the money if they didn’t feel they deserved it. And anyone who applied in error will have it taxed back this spring
Trudeau says its better for governments to borrow money now at basically 0 % interest, than for people to be trying to live on their credit cards, paying 20% interest. He’s right.
Brachiator
@LongHairedWeirdo:
Also, getting refundable credits along with a tax refund feels good to a lot of people.
There used to be a program to give out the Earned Income Credit in advance as part of paychecks. But if income changed dramatically, some people could end up with tiny refunds or tax balances. Not good.
Edmund Dantes
Also as much as I want them to realize it, a married couple make 80K each will never consider themselves rich/well off and undeserving of government money. And will see it as taxing them to give their money away to others. So give them a fucking taste too.
Ruckus
@Doug R:
I believe that some want everyone to see exactly what taxes they pay, so that they will want them reduced to the minimum amount of nothing. Of course these are the same people who want the government to stop supporting freeloaders, having anything to do with healthcare, regulation of business, etc, etc.
catclub
@Nicole: ,
So you want schools to teach THREE new things. That is called an unfunded mandate.