Tax refunds are down, but not necessarily because people are paying more

TThe tax season of its year is the first in which the new tax provisions implemented by 2017 have been implemented. Trump tax cuts are in effect for most people, and many taxpayers who have made an early claim have seen their repayments decrease.

As a commentator Twitter Mz. Shelton (@LuvinthemSkins) put it in a publication February 8th:

Refunds have actually been declining since Congress enacted the tax law – but not necessarily because people are paying more.

According to the Internal Revenue Service, the total number of refunds decreased by nearly 16% over the same period last year, with the latest changes to the tax code having been fully incorporated. The total amount reimbursed fell by just over 23%, or nearly $ 6.7 billion. And the average tax refund is down by almost 9%.

Nevertheless, Republicans may rightly claim to have cut taxes for most people. Due to tax cuts, the amount the federal government has asked employers to withhold on paychecks has decreased, which has resulted in an increase in funds in most paychecks during the course of the year. 39; year.

In other words, many people paid less tax during the year. But some, during part of the year, the income reporting period, have benefited from smaller repayments than expected.

This dynamic creates a problem for the GOP: a given taxpayer may receive a smaller lump-sum repayment than a smaller paycheque withdrawal throughout the year.

Democrats have sought to take advantage of this perception to describe tax cuts as tax hikes for non-rich people. "Let's call the President's tax cuts what it is: a tax increase for the middle class to cover the pockets of already wealthy corporations and the 1%," said Senator Kamala Harris , D-Calif. In a comment on the lowest tax refunds.

Nearly 80% of households have benefited from a tax break in 2018, said Nicole Kaeding, director of federal projects at the Tax Foundation think tank on tax policy.

"Last year, most people who took their salary had less withdrawn their salary than they would have done otherwise. People might not realize it, "Kaeding said. Maybe their incomes have gone up, as their health care premiums have gone up, maybe they've put more in their 401k. "

Howard Gleckman, a senior fellow of the Tax Policy Center, another think tank, also downplayed the relevance of the magnitude of tax refunds.

"People, if you want to know if the [GOP tax overhaul] was good for you or not, stop obsessing about the size of your refund and pay attention to your total income tax bill, "wrote Gleckman in a blog post.

According to the Tax Policy Center and the Tax Foundation, about two-thirds of taxpayers have benefited from a tax break in 2018. Only 5% or 6% of them have benefited from a tax break. increase in net tax.

Kaeding added that the perception that individuals have to receive or not a tax reduction could be related to their policy.

But she also acknowledged that the way people use refunds could also affect their vision of the law. Some people, she said, might seek to limit the amount of their repayments because they do not want to give an interest-free loan to the federal government. Others, however, could use it as "forced savings account", thus helping them to not spend more money during the year.

The final repayment data will come after the close of the reporting season on April 15, when a full comparison can be made with 2018. Tax returns have also decreased significantly – 7% – compared to the previous year. same period last year.