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Politics : American Presidential Politics and foreign affairs -- Ignore unavailable to you. Want to Upgrade?

To: Peter Dierks who wrote (30059)	12/4/2008 11:20:01 AM
From: TimF	Read Replies (1) \| Respond to of 71588

Given the common understanding of the ineffectiveness of rebates, why would politicians favor tem? Because the understanding is more common (and even then not universal) among economists, than politicians or voters. For the politicians that do understand the problems of rebates and "temporary targeted cuts", well they might figure that the ideas will still sound good to voters. And targeted cuts and rebates give politicians more power (as they apply where the cuts and rebates take effect), while simple broad based cutting of rates for a permanent/indefinite amount of time reduces their power at the margin. Also, as you point out, targeted cuts and rebates give politicians more chance to buy votes. Targeted refundable credits, have the same effect as cash giveaways. They probably should be counted as spending (at least after the refunded amount exceeds the total income tax liability), but the politician gets to effectively spend and still call it a tax cut.