An interesting experiment in behavioral economics
Conventional wisdom amongst many economists, including an non-professional followers of the dismal science such as myself, is that one-time tax payments are much more likely to be saved than spent. This is certainly what happened last year when the government mailed out lump sum stimulus checks to Americans.
The government is taking a slightly different approach this time, altering its withholdings from workers' paychecks. The theory behind approaching the tax break in this manner is that lump sum payments are more likely to be chucked into a savings account, but when the money trickles to consumers a little bit at a time they are more likely to spend it.
While it certainly is not being conducted in a vacuum and the economy may be so messed up that nothing would help it at this point, it will be interesting to see if the approach that the government is taking this time around will be more effective than it was last time.
I am of the personal opinion that non-permanent tax cuts that come at a time when consumer confidence is sitting at a record low will likely be saved no matter what whenever possible. It will be interesting to see what happens to this money.