New data from the Internal Revenue Service estimates that people making between $250,000 and $1 million per year saw their refunds increase, according to new IRS statistics.
As of late May, the federal government had refunded taxpayers $306 billion for their overpayments in the first year the Tax Cuts and Jobs Act took effect, up from $311 billion in refunds at the same time last year.
Taxpayers earning $250,000 to $500,000 were refunded $14.6 billion this year versus $10.6 billion last year.
Despite that drop, taxpayers with adjusted annual gross incomes between $250,000 and $500,000 were refunded $14.6 billion this year, compared to $10.6 billion last year. Likewise, taxpayers with adjusted gross incomes between $500,000 and $1 million were refunded $6.1 billion, up from the $5.2 billion a year earlier.
Meanwhile, taxpayers making between $100,000 and $200,000 were refunded $44.1 billion this year, down $49.7 billion a year earlier. With some exceptions, refunds were slightly lower this year for earners making less than $100,000.
The new IRS could be another round of ammunition for both the law’s critics and supporters. The tax law passed in 2017 solely with Republican votes, while Democrats criticized it as tilted towards the rich and businesses.
With some exceptions, refunds were slightly lower this year for earners making less than $100,000.
Still, a focus on refunds only reveals so much. The Treasury Department has noted that more taxpayers saw increased paychecks throughout the year and some observers say the smaller refunds are also explained by too few taxpayers updating the withholding amounts on their paychecks.
Furthermore, the law’s supporters emphasize Americans are getting taxed less. The total liability for individual taxpayers this year was $1.048 trillion, according to the IRS data. It was $1.113 trillion a year earlier.
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The latest IRS data runs through May 23, but the agency has anticipated a record 14.6 million extension requests. Many extensions come from high-income taxpayers with complicated tax situations, said Mark Mazur of the Urban-Brookings Tax Policy Center.
Mazur said tax liabilities were more important for the country’s economy compared to refunds and tax bills due at the time of filing. But refunds and tax bills are important for the daily cash flow of a family getting, he said.
About 24.3 million people filing returns owed money when filing this year, up from 23.1 million people in 2018. That figure is slightly up from a recent IRS watchdog report looking at workers who had balances due as of late April. Taxpayers this year were slammed with $2.5 billion more in taxes due at filing, compared to 2018.
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The new tax law “made the progressive U.S. tax system a little less progressive and a little less effective at addressing income inequality,” Mazur said. The new data didn’t change his views, Mazur said, adding that the country’s debts couldn’t afford smaller tax revenue.
But Nicole Kaeding, vice president of federal and special projects at the Tax Foundation, said the tax overhaul was “historic, but not perfect. I think there is a lot to like within the context of the bill, but there are provisions that I think were far from ideal.”
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