Last week's report that the U.S. unemployment rate reached a nine-year high in June has financial analysts pinning much hope on the economic impact of new federal tax cuts scheduled to go into effect this month. Undermining that hope, a recent CNN/USA Today/Gallup poll finds that most Americans have limited expectations about whether the new changes will boost their own finances.
Only one-third of U.S. adults (34%) say that the new federal tax cut law enacted in May will be beneficial to their family's financial situation. A majority (56%) says it will not. In line with the particulars of the tax cut, working Americans and those with children under 17 are somewhat more likely to believe the tax cut will help them than are other Americans.
A key question for economists is whether Americans will save or spend the extra money they pocket from the new tax law. True to form, Americans are highly responsible in their answer to this question. Three-quarters of those who expect to receive an increase in take-home pay as a result of reduced federal tax withholding and/or who expect to receive a rebate check on the child tax credit say they will either save this money (31%) or use it to pay off bills (45%). Only 22% admit they will do what George W. Bush and many economists are hoping -- spend it. (It should be noted, however, that using the money to pay down bills might indirectly boost spending by freeing people up to spend or charge more.)
Best New Blog finalist - 2003 Koufax Awards
A non-violent, counter-dominant, left-liberal, possibly charismatic, quasi anarcho-libertarian Quaker's take on politics, volleyball, and other esoterica.
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