The stimulus check an amount given to a taxpayer from government officials from the U.S. government. The purpose of these checks is to boost the economy by giving consumers an amount of money to spend. Taxpayers get this money since they are hoping to increase consumption and boost revenue at manufacturers and retailers, thereby boosting the economy.
A stimulus check could form part of the larger stimulus package that is designed to help the economy. This was the case for the stimulus checks which were part of the CARES Act in 2020 and the American Rescue Plan in 2021.
Understanding a Stimulus Check
Stimulus checks have been sent across for U.S. taxpayers on several occasions. The amount of the checks is different dependent on the taxpayer’s status in filing. Joint taxpayers typically get more than those who file individually. In some instances, taxpayers who had not paid back their tax obligations saw their stimulus checks automatically added to their balance.
Research released through the National Bureau of Economic Research (NBER) discovered that the delivery method of fiscal stimulus can make an impact on the overall consumer spending habits. The implementation of fiscal stimulus through the distribution of checks has resulted in an increase in spending. However, the use of tax credits equivalent to the amount given in a stimulus check didn’t bring about the same growth in spending by consumers.
Examples of Stimulus Checks
Financial Crisis of 2008
A prime example of the usage of stimulus checks was in 2008, when the U.S. economy entered a serious recession following the 2008 financial crisis. The new Obama administration predicted that sending out checks would stop unemployment from exceeding 8percent.
The payment was included in the Economic Stimulus Act of 2008 which was signed into law under the presidency by President George W. Bush. The government issued cheques to those who had at least $3,000 of qualified income, either when combined with Social Security benefits, Veterans Affairs benefits and Railroad Retirement benefits and earned income.
The checks were worth:
Persons eligible: Between $300 and $600
Couples who file joint tax returns Between $600 and $1200
For children who are eligible: An additional $300 per eligible child.
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