The Trump tax cuts are here, and they’ve cut the refunds that the average American receives. IRS statistics show that the average tax refund is 16.7 percent lower than last year.
The average refund in 2018 was $3,169, while the average projected 2019 refund is $2,640. This is far more dramatic than the eight percent drop that was previously estimated. And some people discovered surprise tax bills.
Netflix paid nothing in taxes this year. Neither did Amazon. But the average person saw smaller refunds. And those tax breaks on corporations haven’t exactly created jobs. It hasn’t led to investments in equipment either.
Even in the cases where businesses have been helped by the Tax Cuts and Jobs Act — Trump’s tax cuts — the president’s trade wars have offset any benefit.
Personal wealth of the richest Americans, though, is doing great.
One major reason that refunds are smaller despite a larger standard deduction is the limitation of the State and Local Tax deduction, known as SALT. This move hit taxpayers living in states with high property taxes particularly hard.
Another reason is under-withholding, giving Americans a small boost per paycheck and hitting them harder in tax season. This had a clear political advantage for the midterm elections.
“People were voting in 2018, so you party with bigger paychecks in 2018 and risk the hangover in 2019 and hope it wears off before 2020,” said former Ways and Means Republican aide Sage Eastman.
Senate Finance Chairman Chuck Grassley (R-Iowa) was clearly frustrated and snapped at reporters.
“Isn’t it kind of stupid to look at a refund, what your refund is?” he said. “That doesn’t tell you what taxes you pay.”
The Treasury Department has cautioned against using any given week’s statistics to project overall tax return trends, but as tax season goes on the trend is toward much smaller returns for average Americans.
Democrats, however, have accused the Treasury of manipulating data and “goosing” paychecks to make it appear as if taxpayers were experiencing a financial windfall that wasn’t actually happening.
And while tax refunds have shrunk, the deficit has ballooned.
Katelyn Kivel is a contributing editor and senior legal reporter for Grit Post in Kalamazoo, Michigan. Follow her on Twitter @KatelynKivel.