NPR syndicates a show called “Marketplace” all over the country (and online, of course). I like to listen to the Morning Report while driving to work. The show does a great job of explaining current economic stories without a lot of technical explanations and acronyms.

I found a game on the Web site called “Budget Hero” which simulates the different factors that go into saving, or destroying, America’s national budget.

There’s some debate about whether the gameplay is faulty or based on incorrect premises. I definitely recommend you don’t “skip the briefing” before playing. Here are some illustrative comments from people who have played the game:

I am a Scottish citizen aged 13 and i can control America’s Budget better than the Bush White House. By M L, From Aberdeen, 07/25/2008

Interesting, but based on a flawed premise. Everone should read “Taxes For Revenue Are Obsolete” to get a look into the mindset of the Federal Reserve, which is neither federal (not a Gov’t. agency) nor a reserve … By Art Northrup, Jr., From NC, 06/18/2008

I wish the people, especially the local candidates, we will be voting for this fall would take this test. Then I’d have an clearer idea of their beliefs. By cj r, From FL, 06/13/2008

Have you played the game? How did you do? Do you agree that it’s flawed?

Homeowners in New Jersey are eligible for a partial rebate of property taxes paid. If you owned and lived in a house in New Jersey on October 1, 2007, you are eligible. Renters like me are eligible for a separate rebate up to $860.

If you haven’t received an application, you should shortly. The state suggests calling the Homestead Rebate Hotline if you haven’t received this application by July 23.

Tenants will not receive an application. The rebate form for tenants was included in the 2007 income tax package. I checked my state tax return, which I filed via TaxAct, and my rebate application was submitted with my income tax form. As I am neither disabled nor over the age of 65, the maximum amount I can receive for this rebate is $80, a 6.7% increase over last year.

The calculation for the homeowners’ rebate is different. For those under 65 and not disabled, you will receive either 20% of the first $10,000 of property taxes paid (if your income is below $100,000), 10% of your total property taxes paid (if your income is between $100,000 and $150,000), or nothing.

To receive your rebate, you muat file your application by August 15.

2007 Homestead Rebate Program

The Internal Revenue Service is recognizing the increasing costs of transportation and has revised the rate that taxpayers can use for deducting business-related travel expenses. For miles driven between July 1 and December 31, 2008, the new rate is 58.5 cents per mile, up 8 cents from the rate used for the first half of this year.

I would expect businesses that reimburse their employees for miles driven will follow suit.

This method for deducting travel expenses from travel is only one option. If you like, you could track all of your travel expenses, including gasoline and tolls, but it’s much simpler to keep track of the miles you drive and use the rate determined by the IRS.

IRS Increases Mileage Rates through Dec. 31, 2008, Internal Revenue Service, June 23, 2008.

The presidential candidates are fighting hard for your vote, and the economy seems to be one of the top issues. To soothe jitters over an economically turbulent near future, Senator Barack Obama proposed a second economic stimulus payment, similar to the one proposed and passed by President Bush and Nancy Pelosi earlier this year.

It’s dubious whether these payments have a direct effect on the economy. They may make some people feel better about the economy—depending on whether they receive a check or they subsidize the benefit for others—which may be a self-fulfilling prophecy. It’s more likely that these proposals designed to boost the economy, which have a nasty habit of showing up in election years or when approval ratings are low (is it just coincidence?), are created more for their public relations benefit.

Similarly, Senator John McCain is calling for a federal gas tax “holiday.” The 18.4 cent national gas tax and the 24.4 cent diesel tax, under this plan, would be suspended between over the summer. Originally planned for the time between Memorial Day and Labor Day, McCain’s campaign website hasn’t updated this issue now that we have passed the first summer holiday.

Someone who believes that gas prices at the pump are determined by supply and demand would argue that lifting a gas tax would simply allow prices to rise up the chain.

Neither a second economic stimulus check nor a gas tax holiday will on its own affect the economy much. It would be great to see some real economic proposals presented by our presidential candidates—ideas whose implementation would provide jobs, manage real inflation, and encourage business innovation while this country learns how to deal with globalization of the economy—rather than gimmicks designed to attract potential voters.

Let’s face it, though, it makes no sense to choose a candidate based on their economic policy, something the Office of the President has little control over thanks to the numerous people involved with setting policy and economic cycles. I can’t imagine that anyone in this country is undecided between McCain and Obama, but the final decision should be based more on who you want appointing Supreme Court justices and who you want initiating military actions (something that used to be left up to the Congress). These are the modern major powers of the Presidency with lasting effects.

McCain resurrects call for gas tax holiday, CNN Politics, June 9, 2008

The nonpartisan Tax Policy Center released a report yesterday that explains in detail the effect that a McCain presidency and an Obama presidency would have on the tax bill for American households. The data are stratified by income range and reflect a wide difference in stated policy between the two candidates.

In addition to making the 2001 and 2003 tax cuts permanent, McCain says he would double the exemption for dependents, lower the corporate tax rate, make expensing rules more generous for small businesses and lessen the bite of the estate tax and Alternative Minimum tax.

The net result: compared with their tax bill today, taxpayers on average would see their tax bill cut by nearly $1,200. That means their after-tax income would rise by 2%...

Obama’s plan would keep the 2001 and 2003 tax cuts in place for everyone except those making more than roughly $250,000, and he would increase the capital gains tax. Obama would also introduce new tax breaks for lower and middle-income groups…

The net result: compared with their tax bill today, taxpayers on average would see their tax bill cut by nearly $160 under Obama’s plan. That means their after-tax income would rise by 0.3%.

It’s also worth noting that McCain’s plan calls for the biggest percentage (that is, most meaningful) tax decrease for the highest earners while Obama’s allows the lowest income earners to receive the biggest break.

This table from the Tax Policy Center study illustrates how after-tax income will change in 2009 if either of the candidate’s tax policies are enacted. A lower after-tax income indicates higher effective tax rates due to a variety of proposed changes to the tax code.

A chart provided by CNN Money defines the income ranges more succinctly and provides hard numbers. I fall in the middle, and would hypothetically see a decrease in my tax bill amounting anywhere from about $1,000 to $2,600 depending on how much I earn and who ends up in office.

This speculation is interesting but mostly academic. These figures are not absolutes for three reasons. First, we’re dealing with politicians, so their proposals might change as they hammer out details, talk to advisers, and determine what strategy will get them into office. Second, their opinions may change once the winning nominee is sworn in to office. Third, any policy changes have to find their way through Congress first, where compromises must be negotiated before anything gets done.

So take these predictions and studies with a grain of salt.

A Preliminary Analysis of the 2008 Presidential Candidates’ Tax Plans [pdf], Tax Policy Center, June 11, 2008.
What They’ll Do To Your Tax Bill, Jeanne Sahadi, CNN Money, June 11, 2008.

For those of you still concerned about receiving your economic stimulus payment, don’t give up hope. Last week, I received a letter from the United States Treasury informing me my wait would soon be over. The letter indicated that I can expect my payment of $600 (which was accurately predicted by the stimulus payment calculator) by May 23. I also knew that I would be receiving a check rather than a direct deposit because I had tax due when filing my return earlier this year.

May 23 came and went. I didn’t receive the check in the mail. While the government did send 1,500 payments to the wrong accounts via direct deposit, I maintained hope that my check would arrive safely, if a little late.

When I arrived home today, my payment was waiting for me in the mailbox. Here is the proof.

Now I need to decide what to do with the money. Paying down my student loan debt is probably the most prudent option, but I have been eying a new telephoto zoom lens. This check would get me halfway there.

Has anyone put their stimulus payment to good use yet?

This has been noted on Consumerism Commentary many times in the last month. If you filed your taxes using third party software like TurboTax or H&R Block, were owed a tax refund, had your filing fees or tax preparation fees deducted from your refund, and qualified for an economic stimulus payment, then you will not receive your payment in the form of a direct deposit. You will receive a paper check, even if you entered your banking information when filing your taxes.

Some of the tax preparers did an insufficient job of explaining this to customers at the time of filing. Ellen, a Consumerism Commentary reader, notified me that TurboTax is reaching out to its customers to blame the IRS, explain the situation, and provide a schedule of payments that matches the schedule posted at Consumerism Commentary in March. Here’s the full text of the email sent by Bob Meighan, VP of Consumer Advocacy at TurboTax.

Dear Valued Customer,

We want to provide you with the most up-to-date information about the tax rebate to which you may be entitled. Recently, you may have received a letter from the IRS advising you when to expect your Economic Stimulus Payment (rebate). That IRS letter may have inadvertently left off some important information. Taxpayers who chose to have their tax preparation fees deducted from their federal tax refund will receive their tax rebate in the mail, not via direct deposit.

Our records show that you chose this payment option in TurboTax. As a result, the IRS has determined that you will receive your tax rebate in the mail. This may result in you receiving your rebate on a date later than expected.

This situation, while not unique to TurboTax, is understandably causing some concern and confusion. To help further clarify the situation, below is the most current IRS rebate payment processing schedule, as well as additional resources about the tax rebates.

I hope you find this information helpful. If you still have questions, the best source for the most up-to-date information is www.irs.gov (see the “Rebate Payment Questions” link).

Sincerely,
Bob Meighan
Vice President, TurboTax Customer Advocacy

The 2008 economic stimulus package is a story that won’t die. Many people have been concerned that they haven’t received their stimulus payment via direct deposit by the date originally scheduled based on the last two digits of their Social Security number.

The Associated Press is now reporting that 1,500 stimulus payments have been sent to the wrong bank accounts. That’s a small portion of the total rebates being delivered, but it may explain why you haven’t received yours.

New York-based IRS spokesman Kevin McKeon acknowledged in a statement that about 1,500 payments nationwide went to wrong bank accounts. But he said the problem was dwarfed by the nearly 30 million stimulus payments totaling more than $27 billion that have been issued correctly…

Anyone receiving a misdirected IRS deposit is required to report the mistake to their bank, he said. Anyone who receives a paper check they are not entitled to must also return the money.

Unfortunately, the IRS has not officially explained to taxpayers the exact amount they should expect to receive, and many people have not used this stimulus payment calculator or the one at the IRS to determine what they should receive.

Good luck.

Some IRS Rebate Money Going To Wrong Accounts [AP]