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EconoMeter: Tax refund - spend or save?

Roger Showley, SAN DIEGO UNION-TRIBUNE

Friday, April 20, 2012

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Kelly Cunningham, National University System
Answer: NO

Taxpayers should spend or save however they choose in their own best interest. Taxpayers receiving a tax refund already gave Uncle Sam an interest-free loan beyond their taxes. Contrary to widespread misconceptions, saving money or paying down debt DOES help the economy by providing resources for investment. Although hoarding cash in mattresses and safes would not help the economy, putting savings in banks, stocks and bonds, or reducing personal debt provides finances to circulate greater spending and investment. Government spending on-the-other-hand does not add to the economy, but merely redirects it from one part to another.