As Americans begin to prepare their 2018 federal tax returns, many are facing the unpleasant surprise that their tax refunds will be smaller this year or that they may even owe money to the government. This comes despite — or perhaps because of — the tax bill passed by the Republican Congress in late 2017 and signed by President Donald Trump, which Trump falsely promised would give everyone a tax cut, but actually raised taxes on many middle class Americans.
On Wednesday, Fox & Friends attempted to spin the situation, blaming taxpayers who should have somehow known to have adjust their withholding a year ago and should have saved more.
Noting that the average tax refund has dropped 8.4 percent since last year, guest and Fox Business Network host Charles Payne claimed Americans should have used their “fatter paychecks” more wisely.
“Here’s the thing. For the most part, the IRS is telling everyone that they just simply did not make the proper adjustments on the withholding at the beginning of the year. So they have been making all of this money,” he said.
He added that employers and taxpayers should have known better, because the Internal Revenue Service “put a lot more memos out” about how to recalculate payroll deductions.
“Of course most people didn’t do that. While people were obviously seeing fatter paychecks they were still counting on that refund they always got. Which is interesting because, you kind of hinted at it, that we would allow the IRS to have like a $2,000 loan, our money, right? Hold on to it because we overpaid. So people should probably consider making these adjustments anyway, unless you want to give the IRS two or three grand of your money to hold for a year. Maybe they can make the interest on it and you won’t.”
The “fatter paycheck” claim applies mostly to higher income earners rather than the average American. Most people did not notice a significant increase in their paychecks as a result of the bill, which mostly benefited the very rich and corporations.
Rep. Kevin Brady (R-TX), lead author of the tax bill, also tried to persuade taxpayers to be grateful for their diminished returns this week, tweeting a misleading claim that tax refunds had nothing to do with the overall tax bill.
“Refunds are a sign you’re overpaying the IRS monthly,” he wrote. “Most Americans got tax cut in 2018 paychecks — when needed the most. 90% of middle class got [a] $2,100 [average] tax cut.”
Rep. Warren Davidson (R-OH), who backed the bill, incorrectly claimed that tax refunds are down because most people “owed less income tax.” And Sen. John Cornyn (R-TX), who helped push the bill through the Senate, argued “less taxes = less withholding = less refunds” — a gross oversimplification.
CLAIM: Lower tax refunds = higher taxes.
FACTS:
– Tax refund has ZERO to do with your overall tax bill.
– Refunds are a sign you're overpaying the IRS monthly.
– Most Americans got tax cut in 2018 paychecks – when needed the most.
– 90% of middle class got $2,100 ave. tax cut pic.twitter.com/NMMmIksdvK— Rep. Kevin Brady (@RepKevinBrady) February 12, 2019
Tax refunds are overpayments that get returned. Why make interest free loans to the IRS? Many people will see lower refunds this year because they: 1) owed less income tax, and 2) had few tax dollars withheld than under the previous tax code. More cash all year grew the economy.
— Warren Davidson (@WarrenDavidson) February 12, 2019
Less taxes = less withholding = less refunds https://t.co/aBTj6kmYNz
— Senator John Cornyn (@JohnCornyn) February 11, 2019
According to the Tax Policy Center those in the bottom 20 percent of earners likely saw an average tax cut of about $60 total for the year. The next 20 percent could expect just a $380 total cut, while the top 0.1 percent of Americans saved an average of more than $190,000.