Getting a tax refund is a springtime tradition that Americans love as much as Easter candy.
But fewer people are getting refunds this year and that’s causing angst for Republicans who want to convince voters that the 2017 tax overhaul really did give them a tax cut. If middle America can’t be persuaded, it could have big implications for the long-term viability of the overhaul, and how consumers spend their extra income.
Republicans are on the defensive. The once little-noticed ritual of releasing weekly refund data during the tax filing season has become politically fraught, with unfavorable data being released late on a Friday night, and better figures a week later causing Treasury Secretary Steven Mnuchin to take to cable news to tout success.
“Taxes are down so refunds should be down,” Mnuchin told the House Ways and Means Committee on Thursday. Mnuchin added that many people did not change their withholding and so refunds are consistent with last year.
Democrats see an opportunity to use the drop in refunds to hammer Republicans in the 2020 campaign for seeming to favor the wealthy and denying middle- and lower-income people the refunds they count on.
Polling shows the GOP has work to do. The tax law is the Republican Party’s signature legislative achievement, but still only about 39 percent of people approve of it, according to a series of polls conducted this year.
Representative Judy Chu, a California Democrat, said her office has received many calls from taxpayers complaining they didn’t get as big a refund as expected. Chu has introduced legislation that would lower penalties for people who didn’t withhold enough during 2018 as a result of the updated withholding tables. The Internal Revenue Service has eliminated some penalties for taxpayers who, in the first year of the new law, didn’t withhold enough.
“They depend on their refunds to pay bills, so they are quite upset,” Chu said. Senator Bob Casey, a Pennsylvania Democrat, predicts voters will remember their small refunds come 2020.
Early in the filing season, Mnuchin argued that smaller refunds meant people had more money in their pockets throughout the year. More recently, he’s pointed out that the refund numbers are coming into line with last year, a sign that he’s given up trying to convince the public that large refunds are less desirable.
Representative Dave Schweikert, an Arizona Republican on the House Ways and Means Committee, pointed to IRS data that shows the average refund is up compared to last year a point that he said hadn’t been noticed.