Spending the Tax Rebate

 The Consumer Electronics Association’s (CEA) economist Shawn DuBravac notes that about 20 percent of consumers plan to spend some portion of their forthcoming tax rebate checks on consumer electronics. He then asks, “What are you planning to do with your rebate check?” 

That’s easy: I have two kids and I file jointly. That means a nice little chunk of your money is coming my way (it’s also my money too; well, actually it’s China’s money, as this rebate is being financed by debt … but I digress). Unfortunately for the industry and for the U.S. economy, 100 percent of my rebate is going into savings. 

While consumers may spend some of their rebate on CE, history suggests that the macro economy won’t enjoy much of a boost from the forthcoming rebates. According to Stephen Entin, president and executive director of the Institute for Research on the Economics of Taxation, “The history of tax rebates is not encouraging. They have not worked in practice … They should not work in theory …” (via SBE Council).