Libertarians Say You'll Pay Next Year for This Year's Tax Rebate

By Melanie Arter | July 7, 2008 | 8:28 PM EDT

( - Surprise! Surprise! That tax rebate that you got in the mail will be coming out of next year's tax return, the Libertarian Party says. That's because the check is not a rebate on taxes you paid last year, but an "advance rebate" on the taxes you are paying this year.

"The simplest way to understand it is to realize that the tax cut wasn't retroactive, it didn't cut the 2000 taxes and therefore, there's no way it really could be a rebate. What he (President Bush) did is he cut taxes in the current year we're in - 2001," said George Getz, press secretary for the Libertarian Party.

"Anytime a change is made to a tax code in the same year that we're in, the effect of that really can't be seen until you pay in April. So in April, of course, one of three things happens to everyone - either break even, or you're going to get a refund or you're going to have to pay," Getz said.

"So if [Bush] really cut taxes in 2001, which he did, under normal circumstances, what that means is that the amount of your refund in April is going to increase, unless of course, you already got your refund, or part of it, which is exactly what happened," he said.

"Anytime you change the tax tables in a current year, you're not going to find that out, you're not going to see the results of that until April. I mean, in the same way, let's suppose the tax rates were increased this year, but you didn't increase your withholding at all, what's going to happen, you're going to get socked with a big bill in April," Getz said.

"And this is really just the reverse of that," he said. "[Bush] cut tax rates for this year. And let's go ahead and assume you didn't change your withholding, as I didn't. What that means is that you're going to get a bigger refund next year than you expected, unless he sent it to you early, which he did."

Getz said Bush decided to give Americans a rebate after the Democrats complained about not giving enough money back to low-income taxpayers. So the president, he said, decided to give a rebate to stimulate the economy now.

"When the Democrats realized it (the Bush tax cut amendment) was going to pass, they decided to jump on board, and they said okay 'we'll take a tax cut, but here's the thing: we want to make sure it's for low-income Americans as well, and let's give them some immediate tax relief to stimulate the economy,'" Getz said.

"And that's when he decided to go ahead and tell the IRS to send this money out right now," he said.

Getz pointed out that the notifications of the tax rebates and the actual rebates themselves cost money to send out, and that money will eventually come out of the pockets of taxpayers.

"The IRS spent, I don't know, millions of dollars sending out, first of all the notification telling you that you're going to get a refund. I don't have an exact figure on that, but obviously anytime you send something out to, 150 or 100 million taxpayers, the postage alone is millions," he said.

"And then of course, the check in an entirely different mailing. So, in order to get a little political benefit from this, [Bush] actually drove up the cost to the taxpayer, because we pay the IRS salaries," Getz said.

He said the IRS would be adding 4,000 new auditors to its payroll as a result.

"The interesting thing is the Bush administration budget actually contained a big increase for the IRS, money to hire 4,000 new auditors ... It's a bit ironic that here's a guy who claims that he's giving you a tax cut, but at the same time, he's giving a big fat raise to the bureaucrats at the IRS. I found that a little interesting," he concluded.

But one IRS employee urges taxpayers not to blame her agency.

"It was not left to our discretion," said Marilyn Brookens, an IRS attorney in Washington. "It was a congressional and presidential decision to do it this way, and we're implementing what we were told to do."