This year’s tax season is the first in which the new tax provisions implemented by 2017 Trump tax cuts are in place for most people, and many early filing taxpayers saw their refunds go down.
As Twitter commenter Mz. Shelton (@LuvinthemSkins) put it in a post on Feb. 8:
WTF! After claiming zero exemptions all year! I lose 1/3 of my refund ??? ?Somebody’s tax return better be on Meet The Press when I wake up Sunday Morning??#taxrefund #newtaxcodesucks
— Mz. Shelton (@LuvinthemSkins) February 9, 2019
Refunds are in fact down 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 is down nearly 16 percent from the same time last year, the last before changes to the tax code were fully incorporated. The total amount of money refunded is down a little over 23 percent, or nearly $6.7 billion. And the average tax refund is down nearly 9 percent.
Nevertheless, Republicans can rightly claim to have cut taxes for most people. Because of the tax cuts, the amount the federal government asked employers to withhold from paychecks went down, leading to more money in most paychecks during the course of the year.
In other words, many people paid less in taxes altogether over the course of the year. But some, in one part of the year, tax return time, saw smaller refunds than they expected.
That dynamic creates a problem for the GOP: A given taxpayer might notice getting a smaller lump-sum refund more than they do having less withheld from their paychecks throughout the year.
Democrats have sought to cash in on that perception to portray the tax cuts as tax hikes for people who are not rich. “Let’s call the President’s tax cut what it is: a middle-class tax hike to line the pockets of already wealthy corporations and the 1%,” Sen. Kamala Harris, D-Calif., tweeted in a commentary on the smaller tax refunds.
[Related: Democrats vilify the Trump tax cuts for generating smaller refunds]
About 80 percent of households got a tax cut in 2018, said Nicole Kaeding, director of federal projects at the Tax Foundation, a tax policy think tank.
“Most individuals had less taken out of their paychecks last year than they would have otherwise. People might not notice that,” Kaeding said. “Maybe their income went up, maybe their healthcare premiums went up, maybe they put more into their 401k.”
Howard Gleckman, a senior fellow at the Tax Policy Center, another think tank, also downplayed the relevance of the size of tax refunds.
“People, if you want to know whether 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,” Gleckman wrote in a blog post.
The Tax Policy Center estimates that about two-thirds of individual taxpayers received a tax cut in 2018. Only about 5 percent or 6 percent saw net tax increases, according to the Tax Policy Center and the Tax Foundation.
Kaeding added that individuals’ perceptions of whether they received a tax cut might track with their politics.
But she also acknowledged that the way people use refunds also might affect their view of the law. Some people, she said, might look to limit the size of their refunds, on the grounds that they don’t want to give the federal government an interest-free loan. Others, though, might use it as a “forced savings account,” helping them avoid spending the extra cash during the year.
The final data on refunds will come after filing season closes on April 15, when a full comparison can be made to 2018. Tax filings are also down significantly — 7 percent — when compared to the same time last year.
