Tax Rebates Explained
by Tom Buchanan  06/05/03

Rebate NOUN: : a return of a part of a payment A deduction from an amount to be paid or a return of part of an amount given in payment.

How do you explain to a teenager that a an income tax rebate is for those who pay taxes? Here is a simply explanation.

You saved up your money and bought the newest Harry Potter and the Chamber of Secrets Game Boy Advance video game for $29.99 and it comes with a $10.00 mail in rebate.

You take your purchase home and fill out the rebate slip along with a copy of your sales receipt and send it off to Nintendo to get back $10.00 of the $29.00 plus tax that you spent on your game. About this time your probably thinking that the store should have just charged $19.99 and saved you the hassle of applying for a rebate.

A lazy classmate finds out that you're getting $10.00 from Nintendo and he want his ten bucks too. So he goes to the store and just pick up the rebate slip without buying the game and fills it out and sends it in. Four to six weeks later you both get a check from Nintendo for $10.00. Somehow this does not seem right to you that you had to buy the product and they didn't, but you figure it was no money out of your pocket and enjoy playing your game.

You decide to save your ten dollars and put it towards the purchase of the next game you want to buy. Your classmate decides to take his free money down to the candy store and splurge.

A few weeks later a new game is out and you gather up your $29.99 plus tax and run down to the store to buy the new game. When you get there, however, you discover the price of the new games has jumped to $39.99 in order to cover the cost of giving rebates to those who didn't actually buy the Harry Potter game, and Nintendo is no longer offering a rebate.

That is what it like giving a tax rebate in the form of a per-child tax credit to people who don't actually pay any taxes.

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