Jewish World Review July 7, 2003 / 7 Tamuz, 5763

Neil Cavuto

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Consumer Reports


The check, and the recovery, is in the mail!


http://www.jewishworldreview.com | Most Americans in this country are getting a raise in July, and it has nothing to do with where they work. Tax tables for virtually all working Americans are going to be adjusted, so that most will see some extra dollars, and for some, a lot of extra dollars, in the weeks and months ahead.

It's all courtesy of the president's $350 billion tax cut that stands to save most taxpayers hundreds, if not thousands, of dollars. Couple those savings with child tax credits that could mean, on average, up to $1,000 extra for a lot of families in this country, and you've got a lot of economic stimulus for this country.

Now there are many critics of the tax cut who say the savings to real Americans don't amount to a real big deal. I disagree. The benefits are palpable: On average, the adjusted tax tables alone will mean an extra $1,600 for the typical American family. That's an extra $130 a month, again, leaving out those child credits.

For families struggling to make ends meet, that means more money for them to spend, save or invest. No matter how they use it, the economy will benefit. If economists are right, and most spend the money, that can only be good news. The more dough plunked down at Wal-Mart or Home Depot, the more those stores buy from other folks to keep up with the demand, and the more they hire, and the more those they hire go on to buy from others, which go on to hire, and on and on.

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And given the fact these tax cuts are percentage cuts across the income board, the more you earn, the more you get back, so for the richer among us, the more dough with which to play. Some critics of the tax cut argue that if the rich don't spend, giving them their money back is a waste of time. I disagree. Let's say they do nothing more but invest it, and some recent mutual fund inflows seem to suggest that's exactly what they are doing (four straight months of more money going into stocks than going out). That money lifts the stocks of companies that then go out and use that money for buying new plants and equipment, providing them the very capital that's been in woeful supply these past years.

Even if the rich do nothing more than stash that moola in a bank, that same bank takes the money and uses it to make more loans and embark on new investments.

The bottom line is, the more money you give back to Americans, the better for all Americans, rich, poor, and the vast majority in between. What's left out of the argument for and against tax cuts is the simple fact that what matters most in an American home is what people take home -- what' s left in that paycheck, after taxes. Beginning this summer, there will be a little more to take home, a change that will be profoundly psychological and beneficial.

I think what's been missed in this debate on the tax cut is the simple emotional aspect of seeing more money in that paycheck; money that didn't come by way of a raise or cost-of-living increase. That kind of stuff is all gravy. Few Americans appreciate the magnitude of what's coming their way, and the permanence of what's coming their way; that for long-term planning, tax rates don't phase out, like cuts in dividends and capital gains. These rates stick around for a while (or at least Washington's definition of "a while").

Families can start thinking about projects they want to complete, education savings they want to advance, maybe even bigger homes they want to buy. With interest rates so low, and tax rates lower, the one-two stimulative punch could be considerable.

I think critics will be amazed at what Americans will do with their own money this summer. Consumer confidence numbers already have been improving. Imagine what happens when those same consumers see their bottom lines improving. Here's the clincher: This money's going to be put to better use and more immediate use than any government program or any bureaucrat's wish list.

I'd much sooner trust a single mom with her dough than have Uncle Sam selfishly hogging her dough. She'll put the money to good use. If Uncle Sam had kept it, he'd be benefiting only himself. That single mom stands to benefit not only herself, but her kids, and, yes, her country; not just this year, but every year -- beginning this summer.

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Neil Cavuto is managing editor of Business News at FOX News Channel. He is also the host of "Your World with Neil Cavuto" and "Cavuto on Business." Comment by clicking here.

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© 2003, Neil Cavuto