What will you do with your tax-rebate check?
(Feds plan to mail up to $600 per person)
Save, spend, invest or pay down debt?
Taxpayers in Arizona and other states have some decisions to make now that Congress and the White House have announced a deal to stimulate the economy with a special $150 billion package of tax rebates and incentives.
Many details remain sketchy, and the plan still must be approved by Congress and signed into law, yet many consumers already are pondering how to use the money.
“I’d do my patriotic duty and spend it,” quipped Orest Lechnowsky, a Phoenix attorney, who would use the money to pay for minor home-improvement projects.
Della Everhart, a legal secretary who lives in Phoenix, has put off some dental work and sees the rebate as a way to pay for that.
“It would be really helpful to me,” she said.
Congressional and White House officials hope most taxpayers think along those lines and quickly spend their rebates to stoke the economy at a time when recession clouds are forming.
Even so, checks aren’t likely to be mailed until April or May.
Although many details are subject to change, a majority of single taxpayers could be in line to receive rebates of up to $600.
Married couples could get $1,200, plus $300 for each eligible child.
The payments are geared to lower- and middle-income Americans, with benefits phasing out for singles earning above $75,000 and married couples making more than $150,000.
An estimated 117 million households could be eligible.
Breaks for business
Other breaks are geared to businesses and include an incentive for making capital investments and more-generous rules to deduct expenses for small businesses.
Bob McGee, president of Southwestern Business Finance in Phoenix, believes that faster deductions for business purchases of real estate or equipment would give many firms an incentive to invest more.
“Over the last few months, businesses have become cautious,” he said. “This will encourage them to buy equipment or buildings, and that obviously will have a ripple effect.”
James Powers, chief executive officer of iLinc Communications, said his firm probably wouldn’t make any new plant or equipment purchases because of the plan.
Even so, the Phoenix-based company could benefit if business customers feel more comfortable about spending on iLinc’s products.
“The mood right now is tentative,” said Powers, whose firm provides Web-conferencing software and audio-conferencing services. “It could help our clients, which, in turn, would help us.”
Jason R. Kaplan, president and CEO of a chauffeured-transportation firm called the Driver Provider, said the ability to depreciate expenses faster could encourage him to buy more vehicles and, in turn, add employees.
“As a small-business owner, it makes it easier to take risks,” he said.
The plan includes a feature to help thaw the credit-crunch freeze as it affects higher-priced homes.
By Russ Wiles
The Arizona Republic
Jan. 25, 2008 12:00 AM
-Posted by Leah Hamman