It's more patriotic to spend tax rebate

Published in the Danbury News-Times August 22, 2001

Robert Halsted has the motives of a true patriot in returning his $300 federal tax rebate (letter, Aug. 5). but in the eyes of his government and many economists, he is committing an unpatriotic act.

The money is just an advance on next year's tax cut, and was sent out precisely so that people would spend it on consumer goods, revive a failing economy, and generate new growth and new tax dollars.

It makes sense. Consumer pessimism is feeding the downturn, and who but consumers know how best to spend the money -- fast?

About two thirds of our federal tax dollar, minus handling costs, is given back to individuals, often with conditions on how to qualify for it and how it should be spent. Economic need is the usual criterion; but even so, the top fifth of earners end up with just as much as the lowest fifth.

Analysis shows that if this tax money were instead given back directly to the public, it could provide an annual rebate of $4,000 per adult and $2,000 per child. That's $12,000 in additional income for a family of four. Combined with a minimum-wage job, that would wipe out poverty in the United States.

The state of Alaska provides a working example. A fund derived from surplus oil revenues sends out about $2,000 annually to each of the state's citizens, with no stipluation on how it should be spent. Surveys have found that this money is overwhelmingly used for durable goods, education, home purchases and savings -- all of which directly benefit the state's economy.

Allan Ostergren
Sherman