Survey results: Americans unsure how they will spend rebate checks

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American consumers may not be as all-consuming as politicians are hoping for when it comes to jump-starting the economy through a broad-based tax rebate, according to findings from a nationwide CCH CompleteTax survey.

"While it may be in the overall economy's best interest for individuals to go out and buy more, when you ask the average person what they would do, they're more focused on their financial well-being than on the health of the economy," said David Bergstein, CPA, a tax analyst for CCH CompleteTax.

The survey of 2,020 U.S. adults, commissioned by CCH and conducted by Harris Interactive®, found that when given the following options, most individuals would:

  • Pay down debt: 47 percent
  • Save it: 32 percent
  • Spend it: 21 percent

    While it's expected that rebate checks will start arriving sometime mid-year, lawmakers still need to iron out the details. The House of Representatives and the Senate have agreed on a package that will provide tax rebate checks of up to $600 for individuals, up to $1,200 for couples filing jointly, and an additional $300 per child. The rebate program will also provide for payments of $300 to low-income individuals living on Social Security benefits as well as veterans who are already receiving government benefits as their primary source of income.

The rebate program will phase out rebates for individual taxpayers with adjusted gross incomes of more than $75,000 and couples with more than $150,000. extend benefits to low-income individuals living on Social Security benefits as well as veterans depending on government benefits as their primary source of income.

"What individuals do with the money, once the check is in hand, will be a good indication of consumer confidence in the economy at that point, and may be different from what they're feeling now, with holiday spending just behind us," said CCH Principal Federal Tax Analyst Mark Luscombe, JD, LLM, CPA.

Paying Down Debt Number One Priority Regardless of Income, Jobs or Kids

Differences in how individuals plan to use their tax rebate are evident across income, employment status, and whether or not individuals have children.

Across all income levels, paying down debt was the most common survey response. Those with household incomes of less than $75,000 before taxes were the most likely to say they will use the rebate to pay off debt, with 52 percent of those with household incomes less than $35,000, 57 percent of those in the $35,000 to less than $50,000 household income level and 50 percent of those with household incomes of $50,000 to less than $75,000 indicating this, according to the CCH CompleteTax survey. Even among households with income of $75,000 or more, 44 percent said they will use the rebate to pay down debt.

In terms of employment status, more than one-half (54 percent) of individuals working full-time or self-employed will use the tax rebate to pay down debt, while 29 percent will save it and 17 percent will spend it. Individuals who are unemployed or retired are more likely to indicate they plan to spend the rebate, with 29 percent and 32 percent of these individuals, respectively, saying they're most likely to spend any tax rebate.

Individuals living with children are more likely to use their rebate to pay down debt and less likely to spend it than those without children in the household, according to the CCH CompleteTax survey findings. Only 16 percent of households with children said they will spend their rebate, while 59 percent said they plan to use the rebate primarily to pay down debt, and 25 percent will save it, compared to households with no children where 22 percent said they will spend a rebate, 42 percent will pay down debt and 35 percent will save it.

About the Survey Methodology

The CCH CompleteTax survey was conducted online within the United States by Harris Interactive from January 30-February 1, 2008, among 2,020 adults (aged 18 and over). No estimates of theoretical sampling error can be calculated; a full methodology is available.

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