Q: Why did you recently write to the U.S. Treasury Department regarding the tax rebate checks sent out over the summer?
A: As the chief Senate negotiator of the tax relief package that passed Congress in May, I wanted to clear the air with the Internal Revenue Service about some confusion surrounding the tax rebate checks. Some taxpayers who will qualify for the newly created 10 percent tax rate applicable for the 2001 tax year may not have been identified by the IRS to receive a rebate check this year because eligibility was based on 2000 tax information. The rebate checks reflected an advance payment on the new lowest tax bracket established by the 10-year, $1.35 trillion tax relief package signed into law in June. Because the new tax rate was made retroactive to January 1, 2001, Congress sought to expedite tax relief to working men and women so they wouldn’t have to wait an entire year for the tax break. That’s why the federal government this summer returned up to $300 and $600 to individual taxpayers and married couples respectively. Plus, in doing so the federal government unleashed $40 billion into a softening U.S. economy. However, some folks who will have enough taxable income in 2001 may not have qualified for the rebate check according to their tax status in the year 2000. Taxpayers most likely affected would include those who in 2000 were claimed as dependents but now have jobs in 2001; nonresident aliens in 2000 with enough tax liability in 2001; and taxpayers eligible for the new refundable $500 child tax credit. In my letter to the Treasury Department, I sought to clarify this oversight and make certain that these taxpayers still will benefit from the new rate either in the form of a bigger tax refund or a smaller tax bill when they file next year.
Q: Is the $40 billion enough of a stimulus to jump-start the U.S. economy?
A: It’s a good start but not enough time has lapsed to make any measurable judgments. Moreover, the tragic aftermath stemming from the terrorist assaults in New York and Washington in September also will impact the already sagging U.S. economy. Congress and the White House are considering a number of economic stimulus measures to keep the economy moving forward. It is very important to buoy consumer and investor confidence. Proposals on the table include business tax incentives, capital gains tax reductions, minimum wage increase and relief for the hard-hit airlines industry. Since the devastating attacks on September 11, Congress has come together much like the rest of the nation. Members of Congress are united to do whatever it takes defend American citizens and our national security. That also includes working to restore confidence in our way of life and strengthening the nation’s economic infrastructure. Over the next few weeks and months, Congress will be keeping close tabs on consumer behavior and spending habits, monitoring our financial institutions, and checking employment, wage and investment data from U.S. employers. As a senior member of the Senate Budget and Finance Committees, I will work to make sure our nation’s tax and spending policies will help America make a strong economic recovery following these horrific acts of terrorism.