A recent Bloomberg poll indicates that only 18 percent of estimated recipients receiving the one-time tax rebate from the federal government plan to use the money to make new purchases. The remaining recipients said they would put it in savings or use it to pay off debt, the poll shows.
To receive the one-time tax rebate check, individuals must file a 2007 tax return with a valid Social Security number and earnings of at least $3,000.
Robin Newquist, senior communications major, said the increasing price of gas could prevent her from spending her check at the mall.
“I’ll use some of it for fun but most of it will probably go into my savings for gas money,” she said. “The price of gas is ridiculous.”
The Labor Department reported that energy and food prices rose in 2007 at the fastest pace in 17 years.
The intent of the rebate checks is to pump $150 billion into the sluggish economy, but the increase in consumer prices may cause recipients to react differently.
“A few hundred dollars will go fast,” said Sonya Manjikian, a graduate student of educational psychology and health sciences. “I’m going to use some of the money (to) pay my credit card bills. The rest will pay for everyday expenses like groceries and gas.”
Two-thirds of the $168 billion Economic Stimulus Act of 2008 will fund the rebate checks to more than 130 million American families. The rest will be used to increase investment tax breaks and expand refinancing opportunities in the housing market.
President Bush called the plan a “shot in the arm” for the economy that will provide a quick relief to taxpayers.
Similar economic plans were enacted during five of the past recessions in 1964, 1971, 1975, 1981 and 2001. They were all largely ineffective, said Robert Krol, CSUN economics professor.
“The temporary relief won’t do anything in the long haul,” said Krol. “The plan is fundamentally flawed because it doesn’t provide a permanent change in tax rates.”
Eligible individuals will receive?between $300 and?$600 depending on income. Married couples will receive $1,200. Couples with children will receive?an?additional $300 for each child.
“It’s an election year,” said Krol. “Politicians from both parties are trying to be the first to write the checks to the American people.”
Andrea Manea, a senior analyst at AIG SunAmerica Retirements Services, Inc., said the rebate checks are nothing more than a nice pat on the back for hard-working taxpayers.
“It’s nice for people to receive a little something back,” said Manea. “Even if taxpayers use it to pay off their own debt, it will still help them a little bit. But it won’t solve any long-lasting economic problems.”
