Despite heat waves and higher gas prices,millions of American taxpayers may find temporary relief this summer _ an average of $423 _ thanks to those tax rebate checks from Uncle Sam.
So how should Americans spend their windfall? Experts differ.
Ron Opp,senior research fellow of the conservative,nonprofit Heritage Foundation,takes the high road of savings.
“History tells us most people have saved what they receive from tax breaks because they know that it’s a one-time deal and it won’t increase their standard of living,” Opp said.
Opp said he expects people receiving the $39 billion parceled out in 91.6 million checks will use it toward savings or debt reduction.
Opp argued the rebate checks wouldn’t make a large impact on the economy because they are only temporary income.
“Even if everyone decided to rush out and buy stuff with their checks,the retail stores aren’t going to hire extra people because they know this is a one-time gig,” he said.
Peter Orszag,president of Sabago Associates,an economic consulting firm in Belmont,Calif.,said people are more likely to spend most of their rebate than save it.
“Most of this rebate will be going to the middle or higher income class and they’re going to probably spend it,” Orszag said.
But the size of the rebate makes it hard to have effect,he said. “It’s just too small to make a difference when you’re spending at most $40 billion in a $10 trillion economy,” he said. “It’s noticeable,but it won’t be overwhelming.”
Critics of the tax package pushed by the White House,such as the Reform Jewish Movement and the Democratic National Committee (DNC),are asking people to donate their rebates to charities or organizations _ like themselves.
David Saperstein,director of the Religious Action Center in Washington,D.C.,said the movement hopes to help invest in the nation.
“It’s not the idea of the congregation giving the whole rebate or half,but having them see how important it is to invest in the programs that help our nation.”
Saperstein said the money collected would go to local synagogues for the members to decide which charities to use.
DNC spokesman Rick Hess said the committee is urging the public to use the tax rebate as a donation to make a statement to President Bush. “We want to let him know that we won’t use our refund to pay for big oil,” Hess said.
According to the terms of the rebate program,as laid out by Congress,eligible taxpayers should receive their checks between July 23 and Sept. 24,depending on the last two digits of their Social Security number.
Single taxpayers are eligible for a maximum return of $300,heads of households for $500 and married joint filers for $600.
The exact amount depends on a complex formula taking into account the taxpayers’ income bracket,said Tara Bradshaw,public affairs specialist for the Treasury Department,who noted the average rebate would be $423.