My Tax Refund Went Down. That Doesn’t Mean My Taxes Went Up

So it’s tax season, and the full effects of the 2017 tax bill are starting to be felt for the first time. And for many people, they’re seeing smaller tax refunds. The IRS indicates that refunds are down by almost 9 percent on average.

This has led many people to say their taxes are going up. They say this is a big reason why the tax bill is bad. But this isn’t true. The bill is bad, but not for the reason people claim. I’ll get into that later.

The simple fact is that you need to look at your actual tax liability and its proportion of how much you made in 2018. For me, my tax refund is about $300 less than it was last year. But my tax liability actually went down. I ended up owing about a percent less in 2018 than I did in 2017, despite having relatively the same income.

The reason this has happened is because the bill changed up the amount in taxes that was withheld from peoples’ paychecks. So in effect, people were paying way more than they needed to from each paycheck, then getting a bunch of it back when it came time to get a refund. The new bill has tightened that up a bit, so that people aren’t paying as much on the front end as they are on the back end. I don’t know if I’d call this a positive or negative thing, but it is what it is.

It’s important to know what you’re criticizing though. I think the 2017 tax bill was bad for the country. More than 75% of the benefits of the corporate tax cuts go to wealthy shareholders.

It’s adding a huge amount to the deficit. $1.5 Trillion over the first 10 years in fact.

Deficits aren’t always bad, but the fact is that this deficit will be used as a reason to cut funding from programs for people that need it. The House GOP last year already proposed last year cutting Medicaid and Medicare to balance the budget.  So you have a plan that benefits the wealthy being used as a reason we need to cut money from poor people. Neat.

The tax bill was a giveaway to the wealthy. It’s bad for that reason. But diminishing refunds have nothing to do with why it’s bad.