Regressive Tax
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Rebate Checks Could Help Some Taxpayers Cope With Tariff Costs
Investopediaยท 2026-01-06 01:00
Core Insights - Tariffs are negatively impacting U.S. families, but President Trump's proposed $2,000 tariff rebate checks could offset these costs, particularly benefiting low-income families [2][4] - The Tax Policy Center's report indicates that the lowest 40% of income earners could see a tax burden reduction of over $2,300 due to the rebate checks, while the top fifth of earners would not experience a tax decrease [3][9] Tariff Impact - Without the rebate, tariffs are projected to increase the average tax burden on families by $2,110 in 2026, with the bottom fifth facing a $400 increase and the top quintile facing a $7,330 increase [6][9] - A family of four could receive a total tariff rebate of $8,000, but eligibility may be limited to those earning $100,000 or less [8] Legislative Context - Senator Josh Hawley has proposed a smaller tariff dividend check of at least $600, phasing out for individuals earning over $75,000 [10] - Administration officials are working on the tariff rebate proposal, which requires Congressional approval, but some legislators express skepticism regarding its funding [11] Financial Implications - Trump asserts that tariff revenues, which totaled $31 billion in November, would be sufficient to fund the rebate checks and contribute to reducing the federal debt [12]