Grassley on Tax Filing Season
We are now in our sixth week of the tax filing season. Over 50 million Americans have filed their tax returns.
As in previous weeks, the IRS is moving forward in the filing season at a pace consistent with previous years. In some aspects, they are exceeding benchmarks set by the last filing season.
This has been one of the most scrutinized filing seasons I can remember.
In some ways that’s understandable. It’s the first filing season after our tax code received the largest overhaul in three decades. And the filing season began shortly after our government experienced the longest shut down in history.
Despite these factors, this filing season has run relatively smoothly. Consistent with previous years, the IRS has processed over 95 percent of the returns the agency received and 80 percent of those returns were sent a refund.
Based on data covering returns filed through February 22nd, over $121 billion in refunds have been returned to the American taxpayers with an average refund of $3,143. This is up slightly over the 2018 filing season.
I only mention this because some in the media and here in Congress have been obsessing over the size of refunds. But as I have pointed out many times, obsessing over the average size of refunds is simply wrongheaded.
A week-to-week focus on the size of tax refunds makes no sense given how wildly refunds can vary early in the filing season. Recent filing season data makes this clear. Within a week, the average size of refunds went from being down by 17 percent to being a little over one percent higher than last year so far this tax filing season. We have over five weeks of filing season to go. I expect there will continue to be variations in the data.
But most importantly, the size of a tax refund is a poor barometer of how taxpayers are faring this season compared to last. A refund merely represents the extent to which a taxpayer has overpaid their taxes during the course of the year. It provides no insight into whether a taxpayer’s tax burden has gone up or down.
I hope the relative silence in the media about the filing season data released at the end of last week indicates they have finally come to understand all this. And that any further swings, up or down, will not generate sensational headlines that only confuse and misinform taxpayers.
I also hope this recent data will help put to rest accusations from some of my Democratic colleagues that the IRS sought to manipulate withholding tables to goose paychecks in 2018.
Nothing could be further from the truth. The primary objective of the IRS in updating withholding tables was accuracy. A report by the GAO bears this out.
In fact, there’s not a single indication in the GAO report to suggest otherwise. The IRS followed the same process and procedures in updating withholding tables this year as it has in previous years.
Moreover, the report documents the extensive outreach Treasury and the IRS conducted to inform taxpayers of the changes and suggest taxpayers check their withholding.
Their outreach included updating and creating pages on their websites, using IRS email listservs and social media campaigns and sharing withholding materials with partners including tax-related groups, large employers, employer associations and organizations representing small businesses.
However, no withholding table has been or ever will be perfect.
Every wage earner may be affected a little differently under the new law based on his or her personal circumstances. The IRS continues to consider whether future improvements to the withholding structure may be necessary. I support those efforts and will monitor the outcome as chairman of the Finance Committee.
But if the tables had not been updated, my guess is that our colleagues on the other side of the aisle would be singing a different tune. Instead of criticizing efforts to ensure withholding tables more accurately reflected the new law, they would be claiming we were trying to backload the tax benefits to trick taxpayers into believing their tax cut was larger than it was through oversized refunds.
This actually may have been the right thing to do politically, but it would have been wrong as matter of principle and tax policy. The excess tax withheld from paychecks throughout the course of the year doesn’t belong to the government. It belongs to the taxpayer who earned it. The government shouldn’t intentionally withhold more than necessary.
I’m proud of the work my colleagues did to update the tax code last Congress. We delivered meaningful tax relief to middle-income taxpayers and job creators. This has contributed to strong economic growth that will benefit all Americans for years to come.
The Treasury Department and the IRS has done good work to implement the law in a timely fashion. They’ll continue that good work to ensure Americans receive their refunds as quickly as possible.
As we progress toward the end of the filing season in April, the data being reported will fluctuate as taxpayers across a range of circumstances submit their returns. I hope that every time there is movement in the data, our friends across the aisle and in the media will keep in mind the two important facts I mentioned earlier.
First, tracking refund data on a weekly basis makes no sense given how wildly the data can vary. Second, the focus on the size of refunds is wrongheaded since it provides no indication as to whether a taxpayer’s tax burden has gone up or down.
Most everyone was oddly silent when the last batch of “good” data was released. I hope we can have a more responsible and accurate discussion in the weeks ahead. I yield the floor.
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