Rumors that the Department of Government Efficiency (DOGE) will begin sending out stimulus checks to American taxpayers has been floating around for some time now since the idea was first proposed to DOGE head, Elon Musk, in a post on social media platform X.
The concept almost sounds too good to be true meaning that there are likely to be certain eligibility requirements that need to be met in order to receive this stimulus check.
DOGE stimulus checks: what are the limitations?
In the initial stages of the DOGE development, James Fishback, an investment manager who briefly worked with Vivek Ramaswamy, has shared that the idea for the DOGE dividend payments came to him in a dream. Rewinding a few weeks back to February, Fishback made a post on X that read as follows: “American taxpayers deserve a ‘DOGE Dividend’: 20% of the money that DOGE saves should be sent back to hard-working Americans as a tax refund check. It was their money in the first place!”
Since becoming aware of the post, both Elon Musk and Donald Trump have shown support towards the idea, making the possibility of this endeavor very real. Trump is rather familiar with the notion of stimulus checks, however these DOGE dividends will be nothing like the COVID-19 stimulus checks.
Who qualifies?
As great as the concept of the DOGE dividend is since it is a redistribution of wealth, unsurprisingly there is a catch to it. The only American households eligible for this tax rebate are those who pay net-positive taxes. As such, low and moderate income households are likely to have collected more in tax credits than what is paid in taxes. The Tax Foundation has further determined that “the bottom 50% of earners in the U.S. pay roughly 3% of the total individual income taxes collected by the IRS.”
“Taxpayers earning below $40,000 generally collect more back in tax credits than they pay in taxes,” according to an analysis by the Pew Research Center. Consequently, these taxpayers would, unfortunately, not qualify to receive the DOGE dividend check. In short and ironically enough, despite being a redistribution of wealth, the DOGE dividend as a tax rebate would not include lower earners.
Inflation implications
During the pandemic, inflation rates had skyrocketed for an array of reasons including overstimulus and an influx of cash in the market. In the present day, inflation is yet again on the rapid rise thereby causing many to question whether more stimulus checks now would be the equivalent of throwing gasoline on the fire.
Fishback has argued that this would not be the case and believes that taxpaying households would rather opt to save or invest the excess. Financial experts have an opposing view, however.
“I believe the inflation impact would be significant,” budgeting and personal finance expert Aaron Razon of CouponSnake said. “If a large amount is distributed amongst taxpayers, a few will invest it, but many would instead increase their spending. That in turn raises demands, drives up prices, and potentially leads to more disruptions in distribution chains.”
Joseph Camberato, CEO at National Business Capital, agreed and said, “We all saw what happened when the government handed out stimulus checks during COVID. The impact would be smaller this time since it’s a one-time payout instead of an ongoing flow of money, but it would still add extra cash into the economy, which pushes prices up.”
The real question regarding this matter is, of course, the actual likelihood of these checks going out and financial experts do not seem too optimistic.
“I don’t see DOGE dividends happening,” Camberato added. “Even with the cuts DOGE is making, we’re still running at a deficit. It doesn’t make financial sense to cut and then continue to give money away.”
“These kinds of speculative proposals can give Americans a false sense of security,” Razon additionally observed.
As such, it would be wise to not loosen the strings on one’s current budget as it could lead to overspending money that you do not even have yet, rather than investing or saving it as per Fishback’s original vision.