Tax Rise Slows Consumer Spending in the USA

February 22, 2013 Taxation in USA

reduced consumer spendingWASHINGTON D.C. – An increase in the rate of payroll tax in the US is having a detrimental effect on consumer spending.

According to the results of a survey released by the US National Retail Federation (NRF) on February 21st, US taxpayers are less likely to spend their money on luxuries or expensive items, following the expiration of several tax credits last month.

The NRF claims that the January 1st end of the temporary cuts to payroll taxes has had a negative effect on the majority of US taxpayers, with approximately 73.3 percent of respondents to the survey saying that their spending habits have been negatively impacted by the changes.

Over 58 percent of those taking the survey also said that the expiration has significantly impacted their household spending, with nearly half of these respondents claiming that they have been forced to delay the purchase of big ticket items such as cars, houses or televisions.

Commenting on the results of the survey, the chief executive of the NRF Mathew Shay said that the slowdown following the tax change, combined with the effects of increasing gas prices, is having a significant negative overall impact on businesses and individuals in the country.

He added that in order for the USA to improve its economic health and to boost growth, action must be taken now to bring down the barriers, such as tax increases, that currently stop consumers from putting their money back into the economy.

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