Mixed Feelings About American Tax Rebate Stimulus
The U.S. income tax rebate, intended to stimulate the snail's pace economy that has emerged as consumer confidence has been beaten down to its lowest level since 1982, begins getting into the hands of people in 120-130 million American households today.
The federal government's hope is that people will spend the money on things that they either need a lot of or else have a lot of desire for.
Retailers, somewhat disappointed by holiday shopping this year as middle class American families anticipated a possible recession, are hoping to get so much business out of the economic stimulus package that many of them are offering a 10% bonus amount on gift cards purchased with a rebate check.
Thus, someone who buys a gift card for $600 will receive a $660 gift card from some retailers.
The American public has given mixed signals about what it will do with the money on the whole. The majority of people seem to be indicating that they will bank the money or else pay down debts instead of sink it back into the economy in a burst of consumerism.
However, economists know that there is a big difference between what people anticipate doing with "found" money and what they actually do with it once it's in their hands or bank accounts.
The people who filed their 2007 income tax returns electronically will be the first to begin receiving their rebates this week. However, the rebate process is beginning about two weeks sooner than was it was originally thought it would, as the government would like to see the economy uplifted before the summer vacation season begins.
Many economists are pessimistic about the long-term consequences of the economic stimulus and call it misguided.
The main problems as they see it: the money is seen as being a "free gift" when in fact it will be re-collected by the federal government in some different guise later on; this kind of "free gift" is an incentive that has a powerful tendency to cause people in general to be less ambitious and less productive as they feel a false sense of security or wealth; and, it sets a very anti-productive and counterfeit nurturance precedent for future government-citizenry relationships.
Some economists also point out that this tax rebate economic stimulus plot is a cash influx, and cash influxes are what cause inflation, which erodes spending power.
The stimulus package is ultimately nothing more than a disguised program of "pure borrowing...just increasing the [federal] deficit," says budget expert Stan Collender.
Tags: Economy , Economic , Stimulus , Tax , Rebate , Inflation , Money , Finance , Financial , Consumer
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