A majority of Americans say their spending and savings plans have been hurt by recent increases in federal taxes, and many expect to compensate by cutting back on their apparel purchasing.
In a survey conducted for the National Retail Federation by BIGinsight, one in six respondents — 16.7 percent — said their plans for spending, saving and budgeting had been “greatly impacted” by the new taxes resulting from the “fiscal cliff” drama at the end of 2012. On top of that, 41.5 percent said their plans were somewhat affected while a slightly larger number, 41.8 percent, said the new tax guidelines would have little or no effect on how they allot their disposable income.
Overall, 45.7 percent said they would cut back on spending as a result of the new taxes and 20.3 percent indicated they would save less.
Among the 5,185 adults responding to the NRF’s queries between Feb. 5 and 13, 29 percent said they would spend less on clothing, lower than the share who said they would watch for sales more often (35.6 percent) or reduce their out-of-home dining (33.5 percent) but higher than those who expect to buy more generic or store brands (24.3 percent) or delay major purchases (24.4 percent).
However, more than half of those who said the higher taxes had “greatly impacted” them — 54.4 percent — said they planned to cut back on apparel spending, higher than any of the other savings strategies offered, including cutting back on vacation and travel plans (50.8 percent). Among those who said the tax situation would impact them “somewhat,” more than a third — 36.7 percent — said they’d cut back on their clothing budgets, also the highest of the measures offered. Likewise, even among those in the “little or no impact” category, the share intending to cut back on clothing expenditures — 13.2 percent — was the highest among the options provided.
Matthew Shay, president and chief executive officer of NRF, bemoaned the damaging effects on consumption from the higher tax rates and gas prices and “ongoing uncertainty about our nation’s fiscal health.”
“Every day we hear about building the middle class,” he said. “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.”
More than a quarter — 26.7 percent — indicated they had no plans to modify spending or saving in response to the tax increases which, for the majority of Americans, resulted from the expiration in a reduction on the Social Security payroll tax rate.
In general, the women surveyed had a greater propensity to economize than did their male counterparts, with 49 percent saying they would spend less overall versus 42.2 percent of the men. That discrepancy was similar to the one between individuals with household incomes below $50,000, exactly half of whom said they’d spend less, and those with higher incomes, 44.5 percent of whom said they’d economize.
The questions on taxes were added to NRF’s annual tax-return survey. Among its other findings were an increase in the percentage of respondents who expect to file their taxes online this year (to 62.5 percent from 60.7 percent in 2012) and a slight decrease in those expecting a refund (65.8 percent from 66.2 percent a year ago). Among those expecting money back from the government, 44 percent said they would use it to augment their savings, 37.2 percent said they would pay down debt and 29.7 percent said they would use it for everyday expenses.