STIMULATING THE ECONOMY: We got our tax refund recently — much larger than it would have been, thanks to the tax cuts and particularly the abolition of the marriage penalty — and while some of the money has gone to the college account, it has also funded some home improvements: a new gas grill (not as fancy as these luxury models advertised on Bill Hobbs’ site but it has 6 burners!), new blinds for the upstairs, etc. The Insta-Wife remains quite enthusiastic about President Bush. I wonder if this effect is widespread?

UPDATE: Here’s a similar account, and reader Nicholas Sylvain emails:

I had a very similar reaction. Upon completing my return, and being surprised at a substantially larger than expected refund, I thanked George Bush & promptly paid off my student loans and bought season tickets to the local minor league hockey team.

The grill I bought, BTW, was a Kenmore Premium. I didn’t spring for the rather-pricey “Elite.” I like the features, and since I do most of our cooking on the grill for 6-8 months out of the year I’m happy with the upgrade.

ANOTHER UPDATE: Reader Gabe Posey emails:

My wife and I were so shocked on seeing how much we were getting back we actually asked the preparer to double check it. If people vote with their wallets, W is a shoe in. Personally, I recently donated some of my refund to bloggers like you and Lileks. It seemed only right to do so, given the service you provide to others with like ideals. I’m curious, though, how John Kerry plans on leaving the tax cuts permanent _and_ raising taxes. I think it will make for an interesting debate point no matter what.

And Greg Schwinghammer reports:

When I did my taxes in January, I was also thrilled by the large refund. I use TurboTax, which had an interesting feature. When the taxes are done, TurboTax shows a chart with side-by-side comparison of your tax payments with 2002 versus 2003 rates. Were I so minded, I might think a vast right-wing conspiracy convinced TurboTax to add this feature.

Interesting. I’d like to see some of those figures. Kim Breuer also emails:

We paid off a major credit card bill, bought a general all-purpose computer for our younger children (to be used for educational purposes only, no internet/email) and are having a new kitchen floor installed with our tax refund.

No Internet? What about blogs? We’re educational! On the other hand, reader Jeff Redman sends this:

The Insta-Wife remains quite enthusiastic about President Bush. I wonder if this effect is widespread?

With half the country earning $35,000 or less and unlikely to receive any refund (remember, all us poor people don’t pay taxes), I’d say probably not. Count yourself among the lucky, bub.

Oh, I do. Or at least among the better-off. Though (pace Virginia Postrel) the Insta-Family isn’t actually “rolling in dough.” We are, however, located in a place where housing prices are exceptionally low, which translates into more disposable income than we’d have in, say, Los Angeles or Boston.

YET ANOTHER UPDATE: Stan Smith emails:

I doubt that your reader Jeff Redman is correct in saying that “half the country” earns “$35,000 or less”, given that the median income is somewhere around $42,000 (figures from the US Census website). And, while I don’t doubt that many earn salaries that aren’t very high, most of those wage earners are entry-level workers like my daughter who earns only the minimum. And of course, if you don’t earn much, you don’t pay much (if any) in taxes, so naturally, you don’t get a big refund (if any). Also, if you’re like me, and want to keep most of the money you earn for yourself, you have minimal withholding, so you don’t get much of a refund either (we have to pay this year, in fact). However, *I* got the use of my money this year, rather than the government, who pays you no interest at all on the excess that they confiscate from you throughout
the year.

Reader Jonathan Michael Hawkins disagrees with Redman:

I don’t know what your reader Jeff Redman is talking about. I made about half of that 35,000 dollars last year (yes, I’m a poor voter with Republican leanings), and I got much more of a refund this year. I’ll finally be able to pay off some debts, which makes me much more comfortable this year than I was last. Moreover, I am in the IT business and will be able to afford more professional certifications, likely leading (long-term) to better employment and higher tax revenue for the government due to my higher paycheck. Win-win.

Indeed. And reader Wendy Cook observes:

I just have to say this because that last gentleman [Redman] seemed to be veering into the “tax cuts for the wealthy” mentality: Getting a backyard grill, installing a new kitchen floor, buying a computer for the kids, paying off a student loan–these are things that wealthy people don’t have to wait for a tax refund to do. These are nice, middle-class purchases that otherwise may not have been possible. I know some people have had a tough year, but your readers’ comments really put the lie to the term “tax cuts for the wealthy.”

Excellent point.

MORE: Gabe Posey writes back in response to Redman:

I’m not sure if this guy is being sarcastic or serious, but I earn in that income bracket and still did very well. I think saying any blanketed tax refund or tax owed is just not plausible. On the whole, though, mainstream America pays enough taxes to receive a refund. Those who do not pay ‘enough’ taxes are often the self-employed or contractors. Even so, these people see the benefit of lower taxes. They may not get a check from the government like most of us, but it still trickles down. This again puts a heaping helping of bunk on John Kerry’s idea of taxing only the rich. As Bill Whittle has argued, the poor and the rich have a vested interest in the same economy. If the rich get richer, the poor get richer too.

By the way, Posey has a blog, which I probably should have mentioned earlier. And reader Mary Pat Campbell writes:

When my sister got her first full-time job in 2000, when she got her first paycheck and noticed all the taxes and withholdings she called up my mother to tell her: “You know, I was thinking about voting for Bush. Now that I’ve seen my first paycheck, I =know= I’m voting for Bush.” At the time, I thought her selfish and short-sighted (I was a protest voter that year — I hated both Bush and Gore.)

Now 4 years have passed, and I’ve come around to my sister’s way of thinking though lower taxes are just one of many reasons I will vote for Bush). My main complaints are protectionism and overspending, but both of those would obviously be worse with Kerry.

I’d hold all nondefense spending flat if it were up to me. (Okay, actually I’d roll most of it back if it were up to me). But that’s not going to happen. And the war is priority one for me at the moment, though I don’t mind having my taxes cut.

STILL MORE: Joseph O’Brien writes:

Just wanted to drop you a quick line regarding being pleasantly surprised with an unexpected or unexpectedly high tax refund. My wife and I adopted our foster daughter this year. We had expected to write-off some of the associated expenses (i.e. legal costs) and get the extra $500/child deduction (We were able to take her as a deduction in tax year 2002).

Well we were completely blown away with a 10K tax credit we were able to claim because our daughter is “special needs”. You can google “tax credit adoption 1993” or check here : I was pretty much in Bush’s camp prior to this revelation, but this sealed the deal.

Stephen Bainbridge has a post on this, and observes:

As for us, we got a very nice 4-figure refund, which we then turned around and applied to our first quarter 2004 estimated tax payment. Not quite as satisfying as seeing that check come back from Uncle Sam, but my already blooming enthusiasm for President Bush likely will spike even higher when I write a much smaller than normal estimated tax payment check in a few weeks.

Yes, the hidden news is that withholding is down, too. But not everyone is happy. Reader Mostafa Sabet emails:

I’m happy as a clam that I got a bigger refund, but I know it’s short lived no matter who gets elected. I’d be perfectly happy if Bush cut spending along with taxes (dollar for dollar would be best). Deficit spending is just money future taxes will have to cover, with interest. I’d rather have higher tax brackets now than in 5 years when I’ll be making more. Kerry’s not better, but gridlock is a great way to keep spending from going up. Maybe he’d be forced to cut spending to get those across the aisle to agree. Of course, I’m the kind of person that puts everything on my debit card to keep my spending in line without incurring high interest, so I’m just projecting my own fiscal preferences. We may not be paying taxes now, which is nice, but we’ll have to foot the bill later (I’m 25 and don’t want to get stuck with the bill).

I’d like to see the spending cuts, too. The real question, though, is probably between deficits from spending and deficits from tax cuts. If that’s the choice, I prefer the latter. In this, as I mentioned in an earlier post, I guess I agree with Milton Friedman: “Raise taxes by enough to eliminate the existing deficit and spending will go up to restore the tolerable deficit. Tax cuts may initially raise the deficit above the politically tolerable deficit, but their longer term effect will be to restrain spending.”