Poll: Tax Rebate checks paying off debt

CBS MarketWatch ^ | August 20, 2003 | Carolyn Pritchard

[shiva]

I'll be debt free early next year.

Spouse and I decided to do the same 5 years ago. Not easy but we did it.

[Arrowhead1952]

Repaying debt is spending

Anyone who pays off high interest debt is cutting the interest debt. Once you get all the interest paid, you will have more money to spend. We have no credit card debt and pay every credit card bill in full every month. The only interest we pay, is on our home mortgage.

[scottlang]

I have talk to three friends at church and work whose families got these checks. Two used this money to pay off debt and one bought school supplies. They had to buy the school supplies anyway.

[Orangedog]

Without getting too technical, taxpayers with children that had adjustable gross income (the number at the bottom of the first page of the 1040) of between approximately $30,000 to $120,000, and have filed their 2002 tax return, will receive payment of $400 per child.

Your statement was accurate, but it's NOT just taxpayers who will be getting these checks. Yes, you do have to have kids to get this, but even families with zero income tax liability will get these. In that regard, many of these are not tax-rebates, but welfare checks or transfer payments. And before anyone chimes in with the "they are too tax payers...they pay social security taxes!" connard, it should be noted that these people are refunded almost every penny (in some cases more) of the social security taxes that they paid in, through (un)earned income tax credit.

Welfare ended as we knew it....now the lower rungs of the middle class are on it!

[VRWC_minion]

It doesn't matter if the money is used to pay bills or to pay off debt. Either way it boosts the economy.

That said, for all those who use credit cards is there any doubt these people will charge up their balances again ?

[Drango]

Granted it is small but it is every payday.

Only if you have a job :-)

[Unicorn]

Keep working

[VRWC_minion]

I'll buy into what you say here, but what about the month after, and the month after, etc...How far was this paltry rebate supposed to carry the burden? Blackbird.

The month after and the month after have redueced income taxes that have kicked in so your take home pay is higher and your dividend check is worth more. This "paltry" amount is just the first installment.

[StopThePress]

>"As for the people surveyed in the CBS poll, about 55 percent said they had not yet received their rebate check, and about 13 percent of the respondents said they did not expect to receive one."<

Wait a minute. I thought this tax cut was only for the rich. Is CBS Suggesting that 87% of the population is "rich"?

[Orangedog]

Now you create a new debt and it is more likely a consumer rather than business debt. So what has happened is a debt transfer from one individual to another. In essence, we are back to square one ;-)

Reducing or eliminating debt is a good thing for the long term and it needs to happen. The consumer has been spending money like drunken sailors for years. Real savings rates have been negative for a while. How long can consumers continue to spend 105% to 110% of their income? With interest rates jumping last month, the refinance boom is now coming to a quick end. Yes, new housing numbers recently spiked to a 17 year high, but that was people rushing in, fearing even higher rates. It was a very large blip, but a blip nonetheless.

Whith interest rates rising, the consumer will have to pay more to service the debt he/she has already stacked up. The people paying down their debts with these checks are doing what needs to be done, not what the feds want them to do.

[Capitalism2003]

Who cares what people do with THEIR MONEY???
If they want to pay some bills, great!...hell of a lot better than letting the compound interest build up on them...The rebate checks released some of the pressure on people, and that is always a good thing. Reducing the tax burden on workers is ALWAYS a good thing!

[Reagan is King]

Okay, so if I paid off a $400 debt this month, that leaves me more of my paycheck to spend on other stuff instead of paying on that debt. Either way I have more money to spend.

More libs looking for the dark lining in every cloud. Usually we get the bad news that consumer debt is rising, now it's bad news that we're paying it off. Sheesh.

[elfman2]

"Spending does not equal "good for the economy,"…"

Why would you say that? What are the alternative? Saving? That's worthless, creates no value. (And any increase in money available for investment from savings can be duplicated by changes in FED rates or rules.) Paying off debt? Again, creates no wealth, but it at least it reduces the overhead of servicing the debt.

Unless American consumers are at the point of having such high personal dept that spending more is counter productive, I think more spending does equal "good for the economy". This of course assumes that the economy isn't already running at near 100% and that waste and inefficiency aren't unusually high.

[JohnGalt]

Democrats love your economics.

I prefer capitalism to consumerism, but that is why we probably disagree.

[GYPSY286]

Unfortunately, yes. As a single mom,I supported my mom (who passed away) and my son (24)who also resided with me until a few weeks ago, on my measley salary. He has since graduated and moved to Florida. Regardless of the fact that I had the expenses and certainly met the salary caps, I was not eligible because of my son's age. Next year, I will have to file as single with no dependents...rather than head of household...afraid it's going to be ugly.

[Baseballguy]

Pres #40 made the concept "Trickle Down Economics" guess what, it works. Taking money away from gov. and giving it back to the public sector lets the money work.

No worry on the job lost factor. Remember its the dollar value that companies compare to overseas. If more jobs are moved offshore it cost more to convert the dollar. Therefore it would be cheaper to build the product here. Its a cycle and its main change will be new equipment for manufactures. Since to have the same production a company would hire the same amount of employees they let go and have higher tech machines to compensate for the labor change.

[JohnGalt]

It 'works' but not because people 'spend' more but because the market is more efficient at allocating limited resources than the government.

When you site #40, he demonstrated to Republicans that supply-side politics/rhetoric would work, but keep in mind he wiped out two-thirds of his tax cut in 1983.

Bush's Tax Cut was much too small to compete with taxes being raised at the local and state level, and it barely accounted for the rate of inflation (or bracket creep) over the past 12 years. Bush is not a supply-sider, or at least has demonstrated no belief in 'trickle down' and he was foolish to make a case for his cuts based on such theories he does not believe in.

[discostu]

That's what you're supposed to do with windfalls, pay off debt now have more money to spend later in a recurring fashion that's much better for the economy than a one time boost.

[Centurion2000]

It'd be nice to see my check

[elfman2]

"Democrats love your economics. I prefer capitalism to consumerism, but that is why we probably disagree."

One has to be pretty ignorant of economics and politics in general to think giving people as much of their money back as the voters will allow is "Democrat economics".

I presume like Rand you favor the gold standard, or some such variation, that rewards hoarding as much as risk taking. Under that standard, as the pie gets bigger everyone that sits on his share of the gold has his assets inflated proportionally, parasites on industry. By definition half the available capital will always be in the hands of gold brokers. That's cripples capitalism. Greenspan started there, and then grew out of it.