Thursday, March 6, 2008

How will you spend your tax rebate?

This year most taxpayers will receive tax rebates amounting to $600 for individuals, $1,200 for couples—plus an additional $300 per child. This is President Bush’s effort to stimulate the economy. House Speaker, Nancy Pelosi said, We believe the stimulus, the way it is targeted, will put money into the hands of those who will spend it immediately, injecting demand into the economy and therefore creating jobs."

Will the plan work? Results of our non-scientific poll asked Coors Credit Union Website visitors about plans for their rebate checks and here are the results:

Pay Bills—56% (236/423)

Buy Stuff—13% (56/423)

Save It—31% (131/423)

Our survey tracks well with other national polls like Kiplinger, the Consumerist, and ABC Fresno . But it will take some time to see if we all behave as we say we will. Still, past tax rebate programs have not proven to be the hail mary everyone hopes for. An article posted by the Heritage Foundation explains the problem with tax rebates like this:

… tax rebates fail, because they do not encourage productivity or wealth creation. To receive a rebate, nobody has to work, save, invest, or create any new wealth.

Supporters of rebates argue that they "inject" new money into the economy, increasing demand and therefore production. But every dollar that government rebates "inject" into the economy must first be taxed or borrowed out of the economy. No new spending power is created. It is merely redistributed from one group of people to another.

Personally, I’m not a big fan of the Economic Stimulus program. But really I hope to be proven wrong. I’d like to see anything work to turn steer our economy out of this nose dive. But my rebate will not go to the purchase of new goods as Ms. Pelosi wishes.

1 comment:

  1. I bet the big screen HDTVs go flying off the shelves.