Marketing Review - Spring 2008 - (Page 34)

This article outlines who will get the rebates, how much, and when they will be distributed. In addition, we offer five reasons why the tax rebates, even in a slowing U.S. economy, have the potential to boost 2008 hospitality and travel sales. We also discuss strategies for hospitality sales, marketing, and revenue managers to enhance hospitality and travel sales and revenues from the tax rebates. taxpayer’s social security number on May 2, May 9, and May16 (see Table 2), and PAPER TAX FILERS: Rebate checks will be sent by the IRS via U.S. postal mail by the last two digits of the tax payers social security number on May 16, May 23, May 30, June 6, June 13, June 20, June 27, July 4, and July 11. In general, expect the paper checks to be in the hands of consumers five days after the IRS mail drop (see Table 3). FIGURE 1. How do you plan to spend your 2008 tax rebate check When will the rebate checks be distributed by the IRS? The tax rebate checks will be distributed in two waves depending on whether taxpayers file their 2007 tax returns electronically or choose to file with a paper tax return. The IRS has announced the following schedule to distribute the tax rebates: ELECTRONIC TAX FILERS: Rebate checks will be sent by the IRS via direct deposit in bank accounts by the last two digits of the Five Reasons the Tax Rebates Could Boost 2008 Travel Sales and Revenues While some in the hospitality and travel industry are skeptical about the tax rebates having an impact on consumer spending for travel, we offer five reasons why the tax rebates have the potential to boost 2008 hospitality and travel sales and revenues. 1. Most consumers spend more than they plan when receiving tax rebates. Who gets the tax rebate and how much? According to the IRS, tax rebate checks will be sent to approximately 130 million middle- and lower income families and individuals that file their 2007 Federal Income Tax returns by April 15 according the following categories of tax filers: (late tax filers with qualified extensions will also receive rebates later in the year) Couples filing joint tax returns with combined 2007 adjusted gross income (AGI) less than $150,000 will qualify for full tax rebates up to $1,200, or $600 each for each filer. (AGI, listed on their W-2 forms after all qualified deductions) Single tax filers with 2007 AGI of less than $75,000 will qualify for rebates of $600 each. In addition, rebates will include a $300 “bonus” added to the taxpayers rebate for each child under age 17 as of Dec. 31, 2007. For example, a family of four would receive a cash rebate of $1,800 ($600 for each joint filer, plus $300 for each child). Those receiving Social Security benefits, certain veteran’s disability payments, and those with no income taxes must have at least $3,000 in this type of income to qualify for rebate checks of $300 each, and $600 for couples. The results of consumer surveys asking people how they plan to use tax rebates before they receive them, are often different from what people actually do after they have the tax rebates in their hands. Evidence from a similar tax rebate program in 2001 indicates that before consumers receive tax rebates they say they plan to spend less and save more of the rebate; however after they receive the rebate consumers actually spend more of the tax rebate than they initially indicated on pre-rebate surveys. Current surveys of consumers plans for the 2008 tax rebate TABLE 1: Tax Rebate Examples and Amounts Shows examples of who gets the tax rebates and amounts. Eligible Taxpayers with Qualifying Income Family of five (Married couple with three children under age 17) Married Couple, no children Single, no children Retired couple receiving Social Security As shown in Figure 1, a nationwide survey by the National Retail Federation asking consumers how they planned to spend their 2008 tax rebate found 40.6 percent said they would spend the rebate, 28.3 percent would pay down debt, 22.8 percent would save or invest, and 4.3 percent would pay medical bills. However, consumer plans for using the rebate do not always match their actions after they receive it. Lessons learned from the 2001 tax rebates Amount of Tax Rebate Check $2,100 ($600 for each parent, plus $300 for each child) $1,200 ($600 for each person) $600 $600 ($300 each) SOURCE: Internal Revenue Service, www.irs.gov How did consumers chose to spend a similar rebate received in 2001? A study by economists Agarwal, Liu, and Souleles distributed in 2007 from the research department of the U.S. Federal Reserve Bank of Philadelphia examined how consumers actually used tax rebate cash in a similar 2001 tax rebate program. The study (titled, “The Reaction of Consumer Spending and Debt to Tax Rebates: Evidence from Consumer Credit Data”) indicates that although consumers said they planned to pay down debt, and some did, consumers HSMAI MARKETING REVIEW • SPRING 2008 34 http://www.irs.gov

Table of Contents Feed for the Digital Edition of Marketing Review - Spring 2008

HSMAI Marketing Review - Spring 2008 Contents COLUMN: The Online Marketer COLUMN: Success Stories COLUMN: Guest Column Ten Trends Now Shaping the Future of Hospitality Turning the 2008 Consumer Tax Rebates into Hospitality and Travel Sales 25 Extraordinary Minds in Hospitality and Travel Sales and Marketing The Lure of Lore: Connecting with Customers Through a Unique Brand Story A Careful Balancing Act A Meaningful Relationship: How Technology Affects the Connection Between Hospitality Marketers and Meeting Planners SPECIAL SECTION: The 2007 HSMAI Adrian Awards Building Five Star Imagery

Marketing Review - Spring 2008

For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.