While people patiently wait for their handouts, it’s important to remember that nothing is free, especially when it comes from the government.
Some student loan recipients stand to get bailed out up to $40,000 per couple, but it all comes at a price that could shock many student loan debtholders.
And Joe Biden’s costly student loan bailout plan is about to backfire on its recipients.
Some states plan to tax Biden’s bailout money
As many former and current college students prepare to celebrate their newfound “free money,” the cash could be considered taxable income in certain states.
While the laws vary by state, it’s likely that tax will be charged on these massive handout funds.
Consumer debt expert Steve Rhode says that any form of forgiven debt is considered taxable income according to the law in some states.
For example, borrowers in Mississippi making less than $125,000 annually could owe another $500 in state taxes if they receive the bailout.
Even worse, Pell Grant recipients who get the $20,000 Biden handout could owe another $1,000.
This state tax bill would create a serious dent in peoples’ incomes and wipe out any possible tax refunds for the year.
Currently, Arkansas, Indiana, Mississippi, Minnesota, North Carolina, and Wisconsin are planning to tax anyone who takes Biden’s student loan handout.
The number of states planning to tax the bailout money could increase as the current tax laws are examined or changed.
For those making little income, the new state income tax bills could do more harm than any of the good supposedly done by the Biden bailout.
Nothing is free, including government handouts
As Democrats celebrate Biden’s new student loan bailout, the reality that nothing in life is free looms large over the masses.
Legally, Congress hasn’t given Biden authority to forgive student debt en masse, and the Higher Education Act makes no mention of developing a student loan forgiveness plan.
Currently, only specific circumstances like fraud, death, or disability make someone eligible for student loan forgiveness.
Yet right now, the executive branch is offering to do just that with a stroke of the pen.
What many loan holders don’t realize (or just don’t care about) is that the plan would cost taxpayers another $300 billion.
This adds even more debt and stress to the average working person and the average U.S. taxpayer.
Not only will this plan increase taxes overall, but it will also cause inflation to rise, putting more pressure on an already fragile economy.
The whole debacle will also likely be challenged in the courts as doubts mount that the Biden administration has the legal authority to give these handouts away.
Yet again, the government proves that freebies are never truly free, especially when it comes to taxation.
As the coastal, urban elites reap the benefits of this massive debacle, the poor and working middle class will ultimately become the real victims.
Before people celebrate all of these “free” government giveaways, perhaps they should take a closer look at the possible repercussions first.
Patriot Political will keep you up-to-date on any developments to this ongoing story.