Prepared Remarks by Senator Chuck Grassley of Iowa
Chairman, Senate Finance Committee
On Tax Filing Season
Wednesday, February 27, 2019
We’re now in the fifth week of the tax filing season.
Based on all reports from the IRS, the filing season is running smoothly.
All systems are operating as expected, returns are being processed, and refunds are being sent out without any major complications.
According to Commissioner Rettig, the IRS has even set a couple of internal records for the speed at which they have processed returns.
At one point, the IRS processed 1.9 million returns in an hour – that’s 536 in a single second.
Of course, you don’t hear much about how this filing season is running smoothly in the mainstream press.
That wouldn’t make for good headlines.
Instead, an obsession has developed around the size of tax refunds.
Set aside that the available Treasury data is merely the first few weeks of a very unusual tax season due to the partial government shutdown.
Never mind that the size of average tax refunds can vary greatly from week to week making year-over-year comparisons early in the filing season essentially meaningless.
Ignore the important fact that less than half as many child tax credits and earned income tax credits have been issued as compared to last year based almost entirely on calendar factors.
And, most importantly, forget about the fact that the size of one’s tax refund tells you absolutely nothing about a taxpayer’s overall tax burden.
I have been amazed by how many of my colleagues on the other side of the aisle – who should know better – have sought to equate incomplete information about lower average refunds with higher taxes.
Even Howard Gleckman, a senior fellow at the liberal Tax Policy Center, characterized the current obsession with tax refunds as “wrong-headed” noting that it’s “not how big a refund check filers get this year but how much total tax they paid for 2018.”
Yet, my colleagues on the other side continue to try and push the false narrative that a smaller refund is synonymous with a tax increase.
Just such a claim by a Senate Democrat running for president was observed by the Washington Post’s fact checker as being “nonsensical and misleading.”
The claim was awarded four Pinochios. A rating the Post reserves for the biggest “whoppers.”
Here are the straight facts.
Anyone telling the American public that a smaller refund is the same as a tax increase is being intentionally misleading and doing a disservice to the public.
The size of one’s tax refund merely reflects what you overpaid the IRS in your paychecks last year.
For the vast majority of Americans, the Tax Cuts and Jobs Act delivered larger paychecks starting last February.
The liberal Tax Policy Center confirms that 90 percent of middle-class Americans will receive a tax cut.
That’s right: Taxes went down, not up, for the vast majority of American families.
This tax relief stems from a combination of pro middle-class and pro-family provisions including a nearly doubled standard deduction, an increase of the Child Tax Credit from $1,000 to $2,000 and overall lower tax rates.
Some may believe we would’ve been better off depriving taxpayers of their tax cut until the IRS sent them a refund after the end of the year.
But this thinking gets things exactly backwards.
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.
It’s the taxpayers who should be able to decide whether they want to put their weekly or monthly tax savings in a retirement account, pay down a credit card bill, enroll their children in club sports, music or dance lessons or help make a car payment.
I encourage all taxpayers interested in how tax reform affected their bottom-line to compare this year’s tax return with last year’s.
The vast majority will see less of their hard-earned money being sent to Washington, DC.
And that’s what matters.
And I would encourage those in the media who are actually interested in how tax reform is affecting taxpayers to take into account the positive signs we see all around.
Write about how blue-collar employment has surged.
How low-income workers are experiencing the highest wage growth in nearly a decade.
Report how new business startups are climbing and how U.S. manufacturers had their best year since 1997.
Or discuss how the economy grew almost 50 percent faster in 2018 than President Obama’s economists predicted as the “new normal.”
All these subjects are far more important than what has thus far in most all respects been an uneventful filing season.
I yield the floor