New Poll Reveals How Americans Will Use Tax Cut Cash

More

Nearly every adult American with a job knows that the "Bush" tax cuts were extended into 2012. Those subject to pay deductions generally understand that they will take home more money than they would have if the cuts expired, according to a new poll conducted by 24/7 Wall St and Harris Interactive. Nonetheless, the implications of the policy are complex and are do not appear to be understood by most Americans.

24/7 Wall St and Harris Interactive wanted to gauge how much benefit most Americans expect to get from the extension of the tax cuts and unemployment insurance, which was bitterly debated by Congress. Most Americans appear to feel like they didn't get much of a windfall. They also did not understand many of the benefits that they will get.

The 24/7 Wall St/Harris Poll On Tax Cuts & Consumer Spending of 2,364 adults indicates that most people will use their tax breaks to pay down debt, cover daily expenses, and add to saving/investment. That means there will be little rise in consumer discretionary spending in the first half of this year due to the tax cuts. Such spending is supposed to play an important part in the economic recovery.

While most people polled understand that unemployment and tax cut benefits have been extended, 47% of those surveyed were not familiar with the Social Security contribution changes that will result in paying lower taxes. This may be due in large part to people failing to differentiate Social Security deductions from the other taxes they pay.

Of course, it makes sense that older people are more likely to be familiar with the Social Security contribution change. They are closer to the age, or at the age, when they receive benefits from the government. Fifty-six percent of those aged 45 to 54 said they were somewhat or very familiar with the changes. The figure rose to 70 percent among Americans 55 years of age and older.

24-7 Harris Poll table 4.png

The data from the poll imply that the consumer spending recovery may still be far off. Fifty two percent of those polled said that they are likely to use the money from tax cuts to pay down debt. This appears to indicate that consumers still feel over-leveraged. Their debt may actually have increased due to holiday spending. Forty-six percent said they would use the tax cut money for everyday spending. Wages have not kept pace with the everyday needs of many Americans. Only 19% of those polled said they would use the money to make a specific purchase, like a car, home, or jewelry.

The poll teaches us that Americans do not understand the current tax code very well. Most people begin to pay attention to Social Security deductions only as they grow older. Finally, most of the money put in Americans' pockets this year because of the federal government's tax cuts will not hit the economy as consumer discretionary spending.

Jump to comments
Presented by

Douglas A. McIntyre

Douglas McIntyre is editor of 24/7 Wall St.

Get Today's Top Stories in Your Inbox (preview)

Adventures in Legal Weed

Colorado is now well into its first year as the first state to legalize recreational marijuana. How's it going? James Hamblin visits Aspen.


Elsewhere on the web

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register. blog comments powered by Disqus

Video

Adventures in Legal Weed

Colorado is now well into its first year as the first state to legalize recreational marijuana. How's it going? James Hamblin visits Aspen.

Video

What Makes a Story Great?

The storytellers behind House of CardsandThis American Life reflect on the creative process.

Video

Tracing Sriracha's Origin to Thailand

Ever wonder how the wildly popular hot sauce got its name? It all started in Si Racha.

Video

Where Confiscated Wildlife Ends Up

A government facility outside of Denver houses more than a million products of the illegal wildlife trade, from tigers and bears to bald eagles.

Video

Is Wine Healthy?

James Hamblin prepares to impress his date with knowledge about the health benefits of wine.

Video

The World's Largest Balloon Festival

Nine days, more than 700 balloons, and a whole lot of hot air

Writers

Up
Down

More in Business

Just In