Slumping sales at big box retailers, including negative “same store sales” growth at Home Depot, have emboldened companies like Wal-Mart and Home Depot to try and lure consumers to their doors by offering to cash their federal income tax rebate checks for free. But Sprawl-Busters today urged American consumers to take whatever little money Uncle Sam gives back and not spend it with Mr.Sam, but either 1) put it in the bank or a mutual fund, or 2) spend it at a local business, where it will recycle more in the local economy. The news services today are carrying the story that “Wal-Mart, Home Depot Roll Out Red Carpet for Tax-Cut Crowd”, and saying these companies are “desperate to boost growth”. The Street.com described big box stores as in a “frenzy to cash in on the Bush tax cut.” At the end of the day, isn’t the Bush tax cut nothing more than a form of subsidy to Wal-Mart stockholders? A total of $38 billion in discretionary spending would certainly help Wal-Mart and Home Depot. But the thought of Americans adding a deck to their house while low income families and the elderly don’t have enough money for things like medications and food, is a pretty pathetic state of affairs. Medicare doesn’t pay for drugs, but Uncle Sam is giving us money to shop at Wal-Mart! Wal-Mart released a statement this week saying “We’re providing this (check cashing) service for the convenience of our customer.” Or for the pleasure of our stockholders? Home Depot, meanwhile, recently launched an advertising campaign to bring tax checks to their stores. The federal tax rebate is the first in 26 years. It will put about $300 in the pockets of most single people and give $600 to married couples, but millions of low income families and the elderly who need it the most, will see nothing because they have no federal tax liability.Wal-Mart and other discount retailers could see a boost to their sales and stock prices from the rebates. The 1975 rebate resulted in a sharp spike in consumer spending, driving a 157% spike in Wal-Mart’s share price in the first half of that year, according to the Street.com. Target (Dayton Hudson) won’t match the other companies’ offer. But consumers have a chance to fool the experts on Wall Street by taking their cash and spending it locally.
If you want free check cashing services, go to your local bank.They would be happy to deposit your funds. For a good local investment in your community, take that check and plan out what you want to buy with it, if anything, and which locally-owned stores you’d like to use. If a local store doesn’t carry what you want, ask them to order it for you. According to a study by the National Trust for Historic Preservation, local businesses invest 60% of their profits back into the local community, while national chains put only 8% back locally. So turn your federal rebate into a local rebate, by spending your check in a hometown, family-owned business. Without these local stores, the national chains everyday low prices won’t look so good. Competition is a process, not a point in time. Invest in the little guys at the bottom of the entrepreneurial pile.The Walton family really doesn’t need to amass more of your money at this point.