The intention of the Act was to stimulate consumer spending. It focused on lower and middle income Americans, who might be more apt to spend rather than invest or save their tax refund. In other words, a wealthier individual might not hesitate to make a large purchase at any time, regardless of tax policy. But a lower or middle class individual who had been putting off necessary repairs, payments, or other large purchases could not do so, because of a lack of funds. Having received the rebate, the recipient could now spend it on a vital purchase. Some individuals would even receive rebates who had never filed taxes before because their income was so low.

When individuals make purchases, particularly large purchases, cash is infused into the economy. Inventories that have been piling up because of consumer fears of a likelihood of a recession go down. Businesses hire new workers,...
[ View Full Essay]