Do Tax Refunds Boost the Economy?

Jordan Zimmer

Do Tax Refunds Boost The Economy?

If there’s one thing that most Americans have in common, it’s that they don’t like taxes. Every year, millions of citizens file their taxes in which many give up 15% or more of their total revenue at the end of the financial year. Taxes have many benefits such as helping improve public services, such as roads, schools, parks, and so much more. But often times people owe less than the sum of the total amount of the estimated taxes that they paid. Therefore tax returns are essentially are exactly as they sound, they are a refund. The amount that is overpaid for will be returned.

Based off of IRS statistics, approximately 77% of Americans who filed taxes will receive a tax return this year, averaging $2,798 per person (TIME). According to CreditDonkey, 44% of the surveyed people will spend their returns will make a big purchase.

Research shows that the people who make big purchases after their tax return often are a direct correlation with stimulating the economy.The reason being is because when consumers have extra money laying around, people have a tendency to spend it. Therefore because they are spending more money, money will be flowing more freely as compared to stuffing your mattress with money.

Logically, when the demand for goods increases, the supply amount also will change too depending on the market. Many economists argue about whether tax returns boost the economy. The answer, well, it's debatable. An argument by one economist might might say that it doesn’t boost the economy because they are just receiving their own money back. However, another economist might argue that it does help boost the economy because the money they receive back is in one big chunk. Therefore, because many aren’t used to receiving so much at once, they may have an incentive to go out and spend it. With both arguments to be valid, the argument is yet to be solved. What do you think? Do tax refunds boost the economy?     

Works Cited

Cloutier, Richard. "How Tax Cuts Stimulate the Economy." Investopedia. N.p., 30 Mar. 2017. Web. 24 Apr. 2017.

Mannino, Naomi. "Survey: Tax Refund Statistics." CreditDonkey. N.p., n.d. Web. 24 Apr. 2017.

"Tax Refunds: Do They Boost the Economy?" Time. Time, n.d. Web. 24 Apr. 2017.

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