Rising Gas Prices Eat Into the Tax Cuts

Rising Gas Prices Eat Into the Tax Cuts

Eric Gaillard

The monthly retail sales report due Tuesday morning should shed some light on the tug of war consumers are facing between the bump in take-home pay from the tax cuts and increasing toll they face at the gas pump. Average gas prices have been rising, up six cents to $2.87 a gallon in just a week, and up more than 50 cents in the last year, according to AAA.

The Wall Street Journal reported that the increased cost of gas could claim a big percentage of the tax cuts for millions of workers:

“Morgan Stanley estimates that if gas averages $2.96 this year, it would take an annualized $38 billion from spending elsewhere, an upward revision from the bank’s $20 billion estimate in January. That would wipe out about a third of the additional take-home pay coming from tax cuts this year.”