萝莉社

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You鈥檙e listening to the podcast edition of the 萝莉社audio newsline. Learn more about 萝莉社 鈥� the home of Thinkers, Doers, Movers and Shockers 鈥� on the Web at wichita.edu.

Taxpayers may think it鈥檚 Christmas in May as they receive tax rebate checks from the IRS ranging from $600 to more than $1,000. The idea behind the tax rebate is to stimulate the economy by getting people to spend more money. It鈥檚 unclear, though, whether the tax rebate strategy will succeed, as 萝莉社economist Jim Clark explains.

Clark: 鈥淗istory says that these kinds of tax rebates may work, but it鈥檚 not completely sure that they鈥檙e going to have an impact on people. It all depends on what we as consumers do with the money that we鈥檙e going to get back from the government.鈥�

So what is the purpose of the tax rebate checks, anyway?

Clark: 鈥淭he idea behind the tax rebate is to help stimulate the economy by getting people to spend more money. We鈥檙e headed toward at least slower growth, if not an actual recession. The idea behind this is to make the economy start growing again.鈥�

Clark looks at the biggest upside of the tax rebate for consumers.

Clark: 鈥淭he biggest upside for us as consumers is that we鈥檒l have some more money to spend. That always leaves us in much better shape than we otherwise would have been.鈥�

Of course, not everything is coming up roses. There鈥檚 a downside to the tax rebate as well, as Clark explains.

Clark: 鈥淭he downside to the tax rebate is that the government has to get the money to pay the rebates with from somewhere. Probably they鈥檙e just going to increase borrowing so that future generations will have a bigger national debt to pay off.鈥�

And then there鈥檚 the matter of what taxpayers will do when they receive their tax rebate checks.

Clark: 鈥淲hat consumers are going to do is going to depend on the individual. Some people are just going to take the money and put it in a savings account. Some people probably will use it to pay down their credit cards. And some people may do what the president and Congress want them to, which is go out and buy something they otherwise wouldn鈥檛 have bought.鈥�

And it shouldn鈥檛 come as any surprise that there鈥檚 at least some confusion and misinformation concerning the tax rebate.

Clark: 鈥淭here鈥檚 a rumor floating around the Internet that all that the tax rebate is going to do is reduce the amount of a refund that you鈥檙e going to get next tax year. That鈥檚 not true. This is an actual reduction in the amount that you鈥檙e going to have to pay in taxes.鈥�

Thanks for listening. Until next time, this is Joe Kleinsasser for 萝莉社 University.