|Consumers adjust spending to cope with payroll tax changes|
|Written by Eric Tiansay|
|Friday, 08 March 2013 12:00 AM EST|
Seven in 10 Americans polled said they are adjusting spending plans to cope with changes in federal tax laws. Recent changes decreased the take-home pay of many workers, according to the National Retail Federation's (NRF) 2013 Tax Returns Survey, conducted by BIGinsight.
When asked how the laws have affected spending, saving or budgeting of their households, nearly six in 10 (58.2%) said their plans have been either somewhat or greatly impacted. Nearly half (45.7%) said they will spend less overall, and 35.6% will watch for sales more often. Additionally, one-third (33.5%) will reduce how much they dine out and 24.5% will spend less on "little luxuries," such as trips to coffee shops, manicures and high-end cosmetic items.
Of those greatly impacted, nearly half (49.2%) will delay major purchases, such as a car, TV or furniture; 58.2% will reduce the number of times they dine away from home; another 43.4% said they will contribute less to savings; 46.4% will comparison-shop more often; and 54.4% will spend less on clothing.
"A smaller paycheck due to the fiscal cliff deal, higher gas prices, low consumer confidence and ongoing uncertainty about our nation's fiscal health is negatively impacting consumers and businesses across the country," said NRF President and CEO Matthew Shay. "Every day we hear about building the middle class. We can only do that if we tear down barriers that prevent consumers from investing their hard-earned money back into our nation's economy. It's really that simple."
The poll of 5,185 consumers, conducted in February, found that half of those who make less than $50,000 a year said they will spend less overall. Additionally, 23.2% will spend less on groceries, compared to 16.7% of consumers who make more than $50,000 a year, and 27.6% will shop at discount stores more often, compared to 19.7% of adults making more than $50,000.
The survey found nearly two-thirds (65.8%) of consumers are expecting a tax refund this year. When asked how they plan to spend it, 37.2% said they will use the money to pay down debt, 44% will put it into savings and 29.7% will use it for everyday expenses.