Demagoguing Tax Refunds

This is tax season. People will be preparing their income taxes for the first time under the 2017 tax cuts.

Some early filers were outraged that their tax refunds are going to be lower than last year. Social media was fired up with complaints that the Trump tax cuts were a fraud. Forums sprung up like #GOPTaxScam.

But nearly every American did receive a pretty substantial tax cut. When the rates go down, the withholding from your paycheck also goes down. That means you didn’t pay in as much, so, assuming your tax bill is less than you paid in advance, you wouldn’t get so much back.

You got your tax savings throughout the year in every paycheck, which you got to keep more of. Your refund has nothing to do with your total tax bill.

But the complaints, though based on not thinking the matter through, were somewhat understandable. Many Americans have come to depend on those tax refunds as a forced savings account (never mind that the government gets to use that money free of charge, rather than their getting interest on it), a jolt of extra income that they have come to depend upon.

So while many Americans didn’t know any better, a number of politicians did know better, but they demagogued the issue.

Kevin D. Williamson discusses the phenomenon. He quotes presidential candidate Kamala Harris:

“The average tax refund is down about $170 compared to last year. 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%.”

And Democratic activist Richard Reich who passes as an economist:

“While millions of Americans have seen their refunds shrink,” Reich writes, “some of the most profitable corporations in the country are filing for massive refunds.”

Williamson goes on to show how Democrats–including Alexandra Ocasio-Cortes–have been distorting other facts about taxes (not just tax refunds, but tax credits and corporate taxation) to create the impression among the public that they are being cheated.

Ironically, though refunds were down at first, now that more taxes has been filed, it turns out that refunds are up after all! But the cynical dishonesty of certain politicians remains.

Photo by stevepb via Pixabay, Creative Commons License