NCPA - National Center for Policy Analysis

A "Prosperity Dividend" To Redistribute The Surplus

February 1, 2001

President Bush wants to give some of the federal surplus back to taxpayers in the form of a rate cut. But it may take time for the effects to work their way through the economy and head off a recession.

Some economists are proposing a "prosperity dividend" as a faster way to immediately stimulate the economy. The dividend would be a one-time payment to every man, woman and child in the country.

  • A tax-free check of, say, $500 sent to each permanent U.S. resident would transfer roughly $140 billion from the government to the private sector.
  • A family of four receiving its $2,000 check would likely spend it on goods and services -- or use it to pay down credit-card debt.
  • There is precedent for this in Alaska's practice of sending an annual check of about $2,000 -- out of the state's royalties on land and mineral resources -- to every permanent resident.

Of course, since the money to fund the check comes from federal taxpayers, not royalties on natural resource extraction, as in Alaska, it is redistributionist, and "targets" those who need the money most: families with children.

Source: Richard Freeman (Harvard University) and Eileen Applebaum (Economic Policy Institute), "Instead of a Tax Cut, Send Out Dividends," New York Times, February 1, 2001.


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