With this BNN news, there is hope for Americans to get some relief in managing their finances, with which they had been dealing post-pandemic crises. However, experts claim that this tax refund is going to be small as compared to previous pandemics. Since Americans are dealing with critical household finances, as most of them are already in debt, they are hoping that the refund will be sufficient for them to survive.
Bankrate’s latest survey shows that 43% of Americans believe that this year’s tax refund is crucial to maintaining their finances, while 32% depend on it.
Inflation has occurred with an increase in the general price level of goods and services in an economy over time. The purchasing power of money falls during inflation. It means the same amount of money can buy limited goods and services. With the survey made, it is clear that there is a rise in the percentage of citizens depending on the refund, which is now 75%, while last year it was 67%.
There are certain measures, like emergency stimulus programs, that may shrink the refunds. This year’s estimation shows that an average of $3,140 in tax refunds is possible, as compared to the previous year, which was $3,536. Along with inflation, Bankrate has found that the levels of debt are climbing steadily. This has worried Americans, as they are not sure how the tax refunds will ultimately go or whether they can cover the increased interest payments from it.
How can tax refunds help Americans?
Tax refunds can help Americans survive inflation by providing them with additional income that can offset the rising costs of goods and services. When individuals receive a tax refund, they can use the money to pay for necessities such as housing, food, and healthcare. This can help alleviate some of the financial strain caused by inflation.
Furthermore, tax refunds can help Americans save money, which can be especially important during inflation. Individuals can earn interest by putting the refund into savings or investments. They can potentially grow their wealth over time.
Further, the survey respondents believe that, compared to the previous year, 28% of citizens will use it to pay down debt, whereas this rate last year was 22%. The remaining 26% of citizens would prefer to use such a refund to enhance their savings. The rate has come down from 32% that was in the previous year.
Ted Rossman, the senior industry analyst at Bankrate, says that many Americans are counting on a tax refund as a financial planning tool, but it may not be sufficient. Rossman further stated that people get their money back, which they gave the government at zero percent interest throughout the last year.
He believes that a tax refund is not free money. Some may wish to get a lump sum, hoping to avoid going into debt, while others may want to get rid of the previous debt.
Conclusion:
With this BNN news, it is clear that Americans are hoping to get better refunds to ease their financial stress. However, it is important to note that tax refunds should not be relied upon as the sole solution to the problem of inflation. Inflation can have many complex causes and requires a comprehensive approach to address. It may include measures like monetary policy, fiscal policy, and other economic interventions to help stabilize prices and support economic growth.