by 
The Curious Bag
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During recessions or fiscal surpluses, governments sometimes issue payments in the form of tax rebates to taxpayers. Rebates are often intended to boost the economy and differ from the tax refunds people receive when they overpay their income taxes.
Identification
A tax rebate is a set sum of money that governments issue to individual taxpayers or households.
Misconceptions
Tax rebates differ from tax refunds, in which the Internal Revenue Service pays taxpayers the difference between taxes collected through withholding and taxes actually owed for the year. The government generally issues tax rebates in set amounts, regardless of how much a person paid in taxes.
Function
Governments often use tax rebates as a way to encourage more consumer spending and stimulate a sagging economy. Governments may also issue tax rebates when running a fiscal surplus, when revenues exceed expenditures.
Effects
Economists' opinions differ on the impact of tax rebates. The National Bureau of Economic Research found that the 2001 tax rebates had little effect on consumer spending.
History
The U.S. government under President George W. Bush issued tax rebates in early 2001 when the nation had a projected surplus and again in 2008 during a recession.
Source:
University of Michigan and National Bureau of Economic Research: Study of 2001 Tax Rebates
Resource:
The New York Times: Do Tax Rebates Work?
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