Income Taxes

What Happened to My Tax Refund?

This is either lazy reporting or intentionally inaccurate. Tax refunds do not indicate if a person’s tax liability increased or decreased.

 

Americans across the country are filing their federal income taxes and many are seeing lower than expected refunds or getting the shock of having to pay more taxes to the federal government. Many liberal politicians and media outlets are ceasing on this to discredit the tax cuts that were initiated when Congress passed, and President Donald Trump signed the Tax Cuts and Jobs Act in 2018.

This is either lazy reporting or intentionally inaccurate. Tax refunds do not indicate if a person’s tax liability increased or decreased.

During tax season television sets are overrun with commercials with how people can spend their tax refunds. People tend to forget that when they get a refund from the federal government it is not “free money,” but rather excess income taxes taken from your hard-earned salary. In other words, a refund means that you provided Uncle Sam with an interest free loan. In fact, the best news for taxpayers is to receive no refund, which means that you are not paying too much in taxes.

Some taxpayers may receive a shock when they must pay more taxes. This could happen for several reasons, such as:

  • The Tax Cuts and Jobs Act lowered rates, which changed the withholding tables and adjustments may be required.
  • The Tax Cuts and Jobs Act also revised deductions, which may impact both refunds and the need to pay additional taxes.

Taxpayers in high tax states are especially getting a shock because the state and local tax (SALT) deduction was capped at $10,000. “The capping of the state and local tax deduction at $10,000 raised the highest effective state tax rates by about 66 percent (for example, in New York City and California, the rate on millionaires rose from about 8 percent to 13.3 percent). In New Jersey, the highest rate has risen from 7.5 percent to 12.75 percent,” noted economist Stephen Moore.

This is not the fault of the Tax Cuts and Jobs Act, but rather the consequence of high state income taxes. High tax states were able to disguise their rates, while being subsidized by taxpayers in other states.  “No longer do residents of low-tax states have to pay higher federal taxes to support the blob of excessive state/local spending and pensions in the blue states,” wrote Moore.

Overall, the Tax Cuts and Jobs Act has provided a majority of American taxpayers with tax relief and it has created an economic boom for our nation. This tax season do not believe the false narrative that federal tax cuts have failed.

 
Skip to toolbar