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Republicans Say The Size Of Your Refund Doesn’t Matter

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And Sen. Chuck Grassley said refunds are a “stupid” way of judging the GOP tax law.

Several million households may be getting a surprise tax bill this filing season because of the new GOP tax law, but Republicans insist nobody should be mad.

The law’s authors argue that people should not evaluate the new tax code based on the size of their refunds because refunds happen when workers have too much money withheld from their paychecks ― not necessarily because their taxes went up.

“Why don’t you write a story saying, ‘You’re stupid to look at your refund to see whether or not you got a tax increase or a decrease,’” Senate Finance Committee Chairman Chuck Grassley (R-Iowa) told HuffPost this week. “You can’t measure by the refund.”

Grassley has half a point. The vast majority of U.S. households got their taxes reduced last year because of the Tax Cuts and Jobs Act. Most people pay their federal taxes by having a portion of their wages withheld from each paycheck, so the new law’s lower tax rates should have resulted in slightly more take-home pay for most workers.

But the new law probably did mess up refunds for several million households. Republicans rushed to write and pass a sweeping tax overhaul at the end of 2017, leaving the IRS little time to revamp the formula that employers and employees are supposed to use to figure out how much should be withheld from their wages.

“Passing a tax law the last week of December and expecting the tax system to adjust in a week is just unreasonable,” said Howard Gleckman, a senior fellow at the independent Tax Policy Center.

The IRS said last year that it expected that the share of people who have too much withheld (and therefore get a refund) to decline from 76 to 73 percent and that the percentage who have too little withheld (and therefore owe the IRS) would increase correspondingly. The agency said that, according to payroll processors, it would have taken half a year to come up with a better withholding system.

Democrats said congressional Republicans and the Trump administration encouraged insufficient withholding in order

to boost people’s paychecks ahead of the 2018 midterm elections.

“I think it’s one of those I-told-you-so moments,” House Ways and Means Committee Chairman Richard Neal (D-Mass.) said.

Many Americans are accustomed to getting a tax refund in the first part of the year, and the way they plan to spend the money suggests they truly count on it, Gleckman said. A survey last year found that 44 percent of Americans polled said they would pay down debt if they got a refund from the new tax law. The average federal refund is about $3,000. 

“For low-income people, if you’re unbanked ... this is really the only way you’ve got to save money,” Gleckman said.

At the same time, most Americans are not experts on the mechanism for adjusting their withholding: the W-4 form they fill out and give to their employers. Only 19 percent of Americans polled said they updated their W-4 last year after the law changed, according to a December H&R Block survey.

Republicans have been annoyed by news stories about surprise tax bills. Like Grassley, Rep. David Schweikert (R-Ariz.), a member of the House tax subcommittee, suggested journalists should do a better job of informing the public. He said that people who are now missing refunds should be glad that they had not effectively lent money to the government.

“Why don’t they know that?” he said. “Do they know they functionally have been being scammed by government withholding?”

But Republicans for the past year have not exactly been jumping up and down yelling about the scourge of overwithholding. Instead, they’ve been touting the big tax cut they gave the American people. The IRS, for its part, did try to warn people to check their withholding with a new calculator on IRS.gov.

The most recent data from the IRS shows that refunds for this filing season are up 1.3 percent compared with the previous year. Multiple-child households that don’t itemize their expenses are the likeliest to get bigger refunds from the new tax code. Filers in wealthier households that previously deducted expenses such as mortgage interest and local tax payments are likelier to be stuck with a bill, partly because those deductions have been curtailed and their tax burden is just higher. So even though a person’s effective tax rate and the amount they withhold are two separate things, they do overlap.

It’s human nature to be shocked by a huge bill after having failed to notice relatively small tax changes in a paycheck, Gleckman said. And it’s also human nature not want to fuss with numbers on an arcane government document.

“Human beings are not going to spend any time going on the IRS website figuring out what they’re withholding is going to be,” he said.

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HUFFPOST.COM

https://www.huffpost.com/entry/tax-refunds-gop-law_n_5c7854aae4b087c2f294953c

 

Average tax refunds down 8.4 percent as angry taxpayers vent on Twitter

Average tax refunds were down last week 8.4 percent for the first week of the tax season over the same time last year, according to the Internal Revenue Service. Dipping refunds are inflaming a growing army of taxpayers stunned by the consequences of the Trump administration’s tax law — and the effects of the partial government shutdown.

The average refund check paid out so far has been $1,865, down from $2,035 at the same point in 2018, according to IRS data. Low-income taxpayers often file early to pocket the money as soon as possible. Many taxpayers count on the refunds to make important payments, or spend the money on things like home repairs, a vacation or a car.

The IRS had estimated it would issue about 2.3 percent fewer refunds this year as a result of the changes in the federal tax law, according to Bloomberg. MSNBC reports that 30 million Americans will owe the IRS money this year — 3 million more than before Trump’s tax law.

Your resource on tax filing
Tax season is here! Check out the Tax Center on AOL Finance for all the tips and tools you need to maximize your return.

“There are going to be a lot of unhappy people over the next month,” Edward Karl of the American Institute of CPAs told Politico. “Taxpayers want a large refund.” Some 71 percent of taxpayers received refunds last year worth about $3,000 on average, according to Karl.

Scads of taxpayers are complaining on Twitter that they have always received a refund — but now owe the IRS instead.

The number of refunds sent out by the IRS was also down — about 24 percent — as the agency struggled to get up to speed after the government shutdown. The agency sent out about 4.67 million tax refunds in the week ending Feb. 1, compared with about 6.17 million in the same period in 2018, according to IRS data.

This year’s filing season, which began two days after the shutdown ended on Jan. 25, is complicated because it’s the first after the 2017 tax law was enacted. Though President Donald Trump boasted that the new code would be so simplified that people could file their taxes on a postcard, that’s not the case. 

In addition, the changes complicated payroll withholding, so that not enough money was withheld by employers in many cases, meaning that people now owe more taxes. The new law also capped IRS deductions for paid state and local taxes, including real estate taxes, resulting in a nasty surprise for many filers. Several other deductions are no longer allowed.

The frustrations will likely continue to fuel support for plans to boost taxes on the ultra-wealthy. A poll last month found that nearly 60 percent of registered voters support a plan by Rep. Alexandria Ocasio-Cortez to impose a 70 percent marginal tax rate on the portion of annual income that exceeds $10 million a year.

Twitter is filling up with complaints from people whose situation has changed radically.

Hispanic unemployment at historic low, thanks to this

Great news: Hispanic employment is booming.

According to the latest job numbers, Hispanic unemployment continues to remain at one of its lowest rates in nearly half a century. The report also showed a near-record high of 27.6 million Hispanics employed and participating in the workforce in January 2019. Just a few months ago, the Census Bureau announced that the median income for Hispanic households grew by 3.7 percent in real terms from 2016 to 2017.

These historic numbers didn’t happen by accident. They are the result of tax and regulatory policies that have increased economic opportunity for all.

The most significant policy change occurred in December 2017 when President Trump signed the Tax Cuts and Jobs Act, which drove record optimism among small business owners and paved the way for significant investments to expand facilities, boost productivity, and increase hiring and wages. A joint study by the Internal Revenue Service and the U.S. Treasury estimated that 9 out of 10Americans saw an increase in their take-home pay as a result of tax relief.

Thanks to the growing economy, more and more Hispanics are able to save, spend, and invest as they see fit, including purchasing a homeand opening up a business.

But to truly appreciate how well things are going for the Hispanic community, it’s critical to look back at the years following the 2008 economic crisis.

The Pew Research Center found that Hispanics were the hardest-hit ethnic and racial group during the Great Recession, with the median wealth of Hispanic households falling by 66 percent from 2005 to 2009. Not surprisingly, the Hispanic unemployment rate hovered around double digits for much of that time, peaking at 13 percent in August 2009.

While there’s been a remarkable turnaround from those grim days, there are warning signs we should heed.

The imposition of tariffs on our biggest trading partners threatens to derail the gains we’ve made. Last September, Washington slapped duties on $200 billion worth of Chinese imports. China followed by announcing trade tariffs on $60 billion of U.S. goods. The U.S. has also imposed tariffs on imports from Canada, Mexico, and Europe. Tariffs amount to new taxes that cost American companies billions while raising the costs for everyday goods and services to American consumers. In short, tariffs make us poorer.

In some places, particularly those with a large number of Hispanic residents, trade is vital to the local economy. In Texas, where 35 percentof the workforce is Hispanic, trade activities employ nearly 3 million Texas workers.

Additionally, some in Congress are also proposing to raise taxes in order to pay for trillions in new government spending. They also have their sights set on imposing additional regulations and mandates on businesses and entrepreneurs. Years of research tells us that unchecked government spending, onerous regulations, and higher taxes are a recipe for less economic opportunity.

Many Hispanics, including first-generation immigrants, know first-hand the debilitating effects of such policies. In far too many countries in Latin America, protectionism, high taxes, and punishing government regulations have made it impossible for many to get ahead. It’s why so many left everything and everyone behind to immigrate to the U.S. in search of prosperity and opportunity.

As the most recent job numbers confirm, the U.S. Hispanic community is thriving thanks to our growing economy. Of course, there is even more that can be done to ensure that more Hispanics are able to live out the American dream. Let’s not raise taxes and grow the size of government, but instead double down on pro-growth economic policies that have been serving our community well.

WASHINGTONEXAMINER.COM

https://www.washingtonexaminer.com/opinion/hispanic-unemployment-at-historic-low-thanks-to-this

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