When Taxes are Lower – Refunds are Lower

A good recent article

U.S. Treasury’s Mnuchin says tax refunds are flat from last year

By Susan Thomas and Jason Lange

WASHINGTON (Reuters) – Tax refunds to Americans so far in 2019 are flat compared to the same period last year, U.S. Treasury Secretary Steven Mnuchin said on Thursday.

Mnuchin, who was speaking at a hearing in the U.S. House of Representatives on Trump’s 2020 budget proposal, did not provide specifics on the dollar value of refunds made this year.

“Tax refunds are flat on last year”, he said.

Previously released Treasury data has showed the government has refunded $142.4 billion to taxpayers this year through March 1, down 3.5 percent from a year earlier. The average refund made, at $3,068, was 0.7 percent higher than a year earlier.

A soft trend for tax refunds could present a messaging challenge for the Trump administration, which has been touting a tax cut enacted last as a major boost to household finances.

While tax rates have fallen for most households, for some Americans their annual rebate is a palpable interaction with the tax code.

Mnuchin said refunds should actually fall when tax obligations fall. Many Americans pay more taxes than they owe over the course of the year. If they were able to estimate exactly what they owe and instructed employers to withhold just that, they would not get a refund at the end of the tax year.

“The fact that refunds are the same means in essence that people did not adjust their holding enough to take advantage of the tax act”, Mnuchin said, referring to the tax law enacted last year. “Because taxes are down refunds should be down.”