"Rebate" checks begin going out next month to millions of tax payers, up to $300 for singles, $600 for those married and filing jointly, and $500 for single head-of-household; the first fruits of the $1.35 trillion tax cut touted by Republicans as the biggest in 20 years and decried by Democrats as "more money for the wealthy". Enjoy the money while you can. It may be all you will ever see of "the biggest tax cut in 20 years".

The rebate comes from the creation of a new tax bracket, the 10% bracket, on the first $6000 of earnings. Previously, this $6000 was part of the 15% bracket. Those who paid taxes will bet a rebate because the law was made retroactive to 1 January, despite the clause in the Constitution that states that the congress shall pass no "ex post facto" laws. That means that retroactive laws are prohibited. Of course, Mr Clinton saw no problem in passing a tax increase when he took office that was back dated to 1 January, so I guess passing an ex post facto tax cut is just playing tit for tat. (Constitution? We don't need no stinkin' Constitution!) What you are actually getting is a refund of taxes paid on that first $6000 of income, which are now taxed at 10% rather than 15%. Those who paid no tax will get no refund, as 5% of zero is still zero. Those who had reported income between $1 and $6000 will have 5% of that amount refunded.

In addition to the new 10% bracket, other benefits were promised: the end of the "marriage penalty"; the end of the "death tax"; an increase in the child tax credit from $500 to $1000; higher contribution limits on IRAs from $2000 annually to $5000 annually; and a reduction in the other tax brackets as well, the 28 reduced to 25, the 31 to 28, and the top bracket of 39.5 to 35%. All these are included in the tax bill...sort of.

Lets take the child tax credit which is supposed to rise from $500 to $1000. This would be an immediate benefit to those with children, as it comes directly off the top of the taxes you owe. But don't count on seeing that $1000 per kid any time soon. Instead of taking effect immediately, the credit is phased in gradually over the next nine years, fully taking effect in 2010. By the time this part of the "biggest tax cut in 20 years" takes full effect, four of my six children will be over 18. Guess I won't see that part of the tax cut after all, nor will millions of other taxpayers whose children will reach 18 before then.

The rest of the provisions follow a similar vein. The "marriage penalty" won't be fixed until 2009. Why? If its really an injustice (and I believe it is), what's wrong with fixing it now? What is so magical about 8 years from now. How many married couples will die (or become divorced) between now and 2009, never having been able to collect on this part of the "biggest tax cut in 20 years"?

The death tax is gradually phased out, disappearing in 2010. Good news for all you old folks! Congress has gotten rid of the law that penalizes you for doing well during your lifetime and attempting to pass that along to your kids...if you can just hang on long enough for it to take effect! Make sure you schedule your demise for the year 2010 however, as we go back to the old rules in 2011.

Looking forward to putting some extra money away in your IRA? Well, don't get too excited. You won't be able to sock away that $5000 a year until 2008. Congress doesn't want you to be too well off in your old age, particularly if they are going to get rid of the death tax. That might lessen your dependency on Government services. Good news though; you only have to wait until 2006 to take advantage of the new $15,000 maximum contribution to your 401(k). If you are planning to retire before then, sorry, but we just can't afford to do this any faster. (Despite the fact that the projected "surplus" is ten times the projected tax cut.)

And don't get too excited about those other tax brackets dropping. It will take five years to drop the 28% bracket to 25%, and the 31% bracket to 28%. The 39.6% bracket won't drop to 35% until 2006. To say that any of these changes will benefit the economy, particularly when it needs a boost now, is a joke. The effects on the economy will be so gradual as to pass unnoticed.

Oh yes, and guess what? If you benefit too much, well then Uncle Sam will help himself back to your wallet via the Alternative Minimum Tax. Never heard of the AMT? Don't worry, you will. The combination of tax reduction coupled with inflation and your success will ensure that AMT becomes a reality in your future. Originally designed to ensure that the "ultra rich" would not be able to duck their taxes, the AMT has been dipping lower and lower into the tax base over the years. It is now poised to reach down into the middle class. Read Bruce Bartlett's article on the AMT to find out more on what it is and how it may affect you. You won't like what you read. The AMT is a separate, parallel taxing system, and is totally unaffected by the current "tax cut". Estimates are that by 2010, over 35 million people will be sucked into the AMT.

Of course, its all academic anyway, since the entire tax cut is rolled back in 2011. That's right, unless Congress acts to make the provisions permanent, they all disappear in 2011, and in effect, we will be faced with what will appear to be an enormous tax increase. The Democrats insisted on this provision and the Republicans caved in order to get the tax cut passed. The Republicans are betting that whatever Congress is sitting in 2011 will vote to continue the tax cut provisions; that it would be political suicide to do otherwise.

Don't bet on it. Tom Daschle wasn't even formally seated as the new Senate Majority leader, and the document hadn't even actually been signed before he was talking about "revisiting" the tax cut. The Republicans might be correct, if all the provisions actually take effect before 2011. But the gradual phasing in takes nine years to complete. During that time we will have two presidential elections. Every Senator will come up for re-election at least once, some twice. We will elect representatives five times. Who knows what the make-up of the Congress will be. We could change administrations twice. I would sooner take my chances with the lottery than lay money that this tax cut will survive unaltered for nine years, let alone be renewed in the tenth when it expires.

For the next nine years, as each phase in date comes up, we will be treated to arguments from the Democrats as to why we can't let that particular provision take effect. It will benefit the rich. (You know, the people who actually pay taxes.) It will take money away from this or that program. (There's always a program they can find to spend money on). The money can be better spent another way. (As if allowing us to keep more of what we earn is spending.) We can't afford it. (As if it's their money in the first place!)

For this tax cut to work, the provisions have to take place now. To leave the "surplus" hanging around in Congress is to allow the Congress to spend it. And having spent it, suddenly they then won't be able to "afford" to give us the tax cut after all. Amid platitudes of "so sorry", they will proceed to take back what they never actually gave in the first place. As Mr Clinton so ably showed us during the eight years he inhabited the throne, it really isn't necessary to actually do something; if you say you are going to do something, that's just as good. After all, what you say you are going to do appears on page 1 in bold type; if you don't do it, that appears on page 28 in small print, if at all. And as long as there is something on page 1 in bold to catch our attention, we don't pay much attention to what is on page 28 in small type.

So take your $300, $500, $600, or what ever you get this year, and be happy. At least you got something. Those who get nothing because you paid no tax, be happy you paid no tax. And realize that at least you aren't being conned - you are getting what your were promised; nothing. That's more than the rest of us will be able to say, we who think we are getting something, and who too, ultimately will come up empty.