Realist, not conformist analysis of the latest financial, business and political news

Great Job, Tax Refunds Down – Fewer Giving Treasury Interest Free Loan That Is

Just a small note about something that rather mystifies. There’s much American commentary each year about the amount and size of tax refunds. That is, Americans have had their taxes deducted at source all year long, then in the run up to tax day (April 15 for the US) they fill out the forms and do the detailed calculations. Was that withholding too much or not enough? If too much then they get a refund, obviously.

OK. People who do get a refund are victims of the IRS getting their initial calculations wrong – they’ve been taking too much out of each paycheck. People who do get such a refund have been offering the Treasury an interest free loan all year. That is, more refunds is a bad thing:

[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””] Individual tax refunds this year have been only slightly smaller than last year, but those shortfalls are adding up. At the end of last month, the amount of money the government refunded was $6 billion below this time last year, according to IRS figures. As of March 29, the Treasury had issued 71.8 million refunds. This time a year ago it had issued 73.4 million. So while the average refund, at $2,873, is only $20 less than it was last year, about 1.6 million fewer people are getting refunds, the IRS said. [/perfectpullquote]

Sure, it’s not expressly stated but the tone there is obvious. Oh My, isn’t that bad and sad? Fewer people are getting smaller refunds! When, obviously enough, the correct statement is that the IRS has screwed up the finances of fewer people less this past year. Given how unusual that latter is best to call it what it is, no?

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