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Few Americans Expect to Use Tax Rebate for New Spending

Few Americans Expect to Use Tax Rebate for New Spending

Most say they will use it for bills or savings and investment

by David W. Moore

GALLUP NEWS SERVICE

PRINCETON, NJ -- One of the arguments many legislators made as they considered the $300 to $600 tax rebate, which the federal government will send to most Americans beginning this week, was that the money would help stimulate the economy. That may happen, of course, but a Gallup poll conducted July 10-11 suggests that the stimulus may not be as great as economists might prefer.

Ideally, to stimulate the economy, most Americans would spend the money for new purchases, but the poll shows that just 17% of Americans expect to do that with their rebates -- at least directly. Another 47% say they will pay off bills, while 32% expect to save or invest it. Two percent say they expect to give their rebate to charity. It is possible, of course, that by virtue of having paid off bills or invested the money, Americans will feel freer to spend other money on consumer products or services, but the poll's results provide no evidence for that possibility.

What People Expect To Do With Tax Rebate
"If you receive a tax rebate, what will you do with that money?"
July 10-11, 2001

There is some variation in what people expect to do with their rebate, depending on their level of income. People who earn between $50,000 and $75,000 a year are most likely to say they will spend it (23%), while those in the under $20,000 a year category are least likely (12%).

Not surprisingly, people in the lowest income group, those earning less than $20,000 a year, are the most likely to pay off bills (55%) and least likely to save or invest the rebate (27%). People in the highest income group, those earning $75,000 a year or more, are least likely to use the rebate for paying off bills (37%) and the most likely to invest or save it (40%).

What People Will Do With Rebate
Compared by Annual Income
July 10-11, 2001

Americans Ambivalent About Impact of Tax Cut, but 60% Approve of Bush on Tax Issue

A new Gallup poll, conducted July 19-22, shows that Americans are somewhat ambivalent about the impact of the tax cut on the country, with four in 10 thinking it will be a good thing, another four in 10 saying it will make no difference, and two in 10 saying it will be a bad thing. That poll also finds that only 11% of Americans think the $300 to $600 rebate will make a big difference to them and their families, while 21% say it will make "some" difference. A clear majority (63%) say it will make little or no difference to them -- 30% only a little difference, and another 33% no difference.

Younger Americans and those with lower incomes are most likely to believe that the tax rebate will make a difference to them, but there is also a political dimension to these views. Republicans are considerably more likely than Democrats to say that the checks will make a difference. This finding suggests people's attitudes about the rebates are in part colored by the fact that President Bush has claimed credit for the tax cut plan after pushing it through Congress.

Despite these views about the potential benefits of the tax cut to the country and to individuals, the July 10-11 poll shows that six in 10 Americans approve of the way Bush has been handling the tax issue. The percentage is up six points from last April, before the tax cut bill had become law.

Views on Tax Cut Highly Partisan

Given that the tax cut was one of the major campaign themes stressed by Bush during the presidential campaign and criticized by his major opponent, Al Gore, it is not surprising that attitudes on this issue are highly related to party affiliation. Republicans are much more likely than Democrats to approve of Bush on the issue and to say that the tax cut will be a good thing for the country, while independents fall in between the two party groups.

As shown in the chart below, while 60% of Republicans think the tax cut is a good thing for the country, only 35% of independents and 24% of Democrats agree. Also, 44% each of independents and Democrats say the tax cut will make no difference to the country, while only 29% of Republicans make that assessment. Finally, Democrats are the most likely to say that the tax cut will be a bad thing for the country (31%), with Republicans the least likely to say that (6%), and independents almost precisely in the middle (18%).

Impact of Tax Cut on Country
Compared by Party Affiliation
July 10-11, 2001

A similar pattern is found when looking at Bush's approval rating on taxes compared by party affiliation. As shown below, 89% of Republicans approve of Bush on this issue, compared with 55% of independents and 38% of Democrats.

Approval of Bush on Tax Issue
Compared by Party Affiliation
July 10-11, 2001

Survey Methods

The results reported here are based on two separate telephone surveys, each with a randomly selected national sample of adults, 18 years and older. The July 10-11 survey includes a sample of 998 adults, while the July 19-22 survey includes a sample of 1,038 adults. For results based on either sample, one can say with 95 percent confidence that the maximum error attributable to sampling and other random effects is plus or minus 3 percentage points. In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.

If you receive a tax rebate, what will you do with that money -- [ROTATED: spend it, save or invest it, pay off bills, (or) donate it to charity]?

 

 


Spend it


Save/invest it


Pay off bills

Donate to charity

No
opinion

           

2001 Jul 10-11

17%

32

47

2

2



Do you approve or disapprove of the way George W. Bush is handling --

K. Taxes

 

 

Approve

Disapprove

No opinion

       

2001 Jul 10-11

60%

33

7

       

2001 Apr 20-22 ^

54%

39

7

2001 Mar 9-11

56%

35

9



 

^ Based on half sample.



As you may know, Congress passed and President Bush signed a law that would cut tax rates over the next 10 years. As part of the law, most taxpayers will receive a rebate check of $300 to $600 from the federal government in the next few months.

Q.53/Q.54 SPLIT SAMPLED

How much of a difference will this tax rebate check make to you and your family -- [ROTATED a big difference, some difference, only a little difference, (or) no difference at all]?

BASED ON -- 534 -- NATIONAL ADULTS IN FORM A; ±5 PCT. PTS.

 



A big difference



Some difference


Only
a little difference



No difference

WON'T RECEIVE REBATE (vol.)



No
opinion

             

2001 Jul 19-22

11%

21

30

33

4

1



Do you think that the new tax cut law [ROTATED: will be a good thing for the country, will not make much difference, or will be a bad thing for the country]?

BASED ON -- 504 -- NATIONAL ADULTS IN FORM B; ±5 PCT. PTS.

 

 


Good thing

Not make
much difference


Bad thing

No
opinion

         

2001 Jul 19-22

40%

39

18

3



(vol) -- volunteered response

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