[Congressional Record Volume 165, Number 28 (Wednesday, February 13, 2019)]
[Senate]
[Page S1300]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
Tax Filing Season
Mr. GRASSLEY. Mr. President, I come to the floor for two reasons: No.
1, to speak about the tax bill of 1 year ago, and then, for a longer
period of time, to address the issue before the Senate, which is the
nomination of Mr. Barr.
The tax filing season began just over 2 weeks ago. Despite the
disruption of the temporary partial government shutdown, the IRS is
reporting to the Nation that all systems are go. Tax returns are being
processed as normal, and refunds are being sent out. While there are
lingering effects from the shutdown, overall, the IRS and Treasury have
done a pretty good job of minimizing the effects of the shutdown on tax
filers.
This season is receiving additional scrutiny as it is the very first
time that tax filers are filing under the tax cuts and reforms enacted
last year. My colleagues on the other side of the aisle and some in the
media appear to be obsessed with finding anything they can manufacture
to declare the filing season under the new law a failure. Of course,
that is after only 2 weeks of tax filing--not a long enough period of
time to draw too many conclusions.
Case in point: Last week the IRS released preliminary filing data
covering the first weeks of the filing season. Immediately, naysayers
began focusing on data that suggests that tax refunds in the first week
were down slightly over last year, as well as focusing on anecdotal
social media posts. Never mind that the current refund numbers are
based on only a few days of data, or that refund statistics can vary
widely from one week to the next. Never mind that most of the social
media posts are unverified. Many have the markings of a coordinated
effort by liberal activists who have regularly used hashtag ``GOP tax
scam'' to attack the law on Twitter, despite a vast majority of
taxpayers paying less in taxes.
Yet our journalists, who are well educated and ought to know better,
fall for it--hook, line, and sinker--including such tweets in articles
with no questions asked or verifying the veracity of these claims.
To be fair, oftentimes buried deep in such articles, well below a
sensational headline, is an attempt to demonstrate some semblance of
unbiased reports, noting that under the tax law, most taxpayers will
see tax cuts. That is right. Most taxpayers will see tax cuts. You most
assuredly wouldn't know this from the headlines bemoaning a reduction
in tax refunds, but the vast majority of taxpayers experienced a tax
cut last year, and will this year, as well.
Every analysis--from the nonpartisan Joint Committee on Taxation to
the right-leaning Tax Foundation, to the liberal Tax Policy Center--
demonstrates that taxpayers are sending less of their hard-earned money
to Washington this year.
As an example, an Iowa family of four with the State's family median
income of around $75,000 stands to see their tax bill cut by more than
half, or about $2,100 in savings. This is real tax relief that began
appearing in many taxpayers' paychecks at the start of 2018. That is a
very important point. The government could have chosen to deprive this
taxpayer of this extra $2,100 last year until they filed their taxes
during this tax season.
This may have been the best thing to do if you are someone who starts
with the assumption that their money would be better off in the hands
of the government interest-free. But I do not believe that is the best
thing to do.
I believe taxpayers know better how to spend their hard-earned money
than Washington does. It should be up to the individual taxpayer
whether it is in his or her interest to put that extra $2,100--or about
$175 a month--in a savings account or spend it on buying school
supplies for their children or maybe even making a car payment. That is
a decision 157 million taxpayers can make and not 535 Members of
Congress or the bureaucrats who are out spending the money.
In early 2018, Treasury and the IRS implemented updated withholding
tables to give taxpayers that option of deciding whether to save or
spend and what to spend it on or how to save it.
A chief priority for the new withholding tables was accuracy. The
IRS' goal was to help taxpayers get the right amount withheld from
their paycheck. However, common sense ought to tell us that no
withholding table will ever be perfect--at least not perfect for 157
million different taxpayers. If they were, there would be no need for
tax refunds. Only what was necessary to satisfy a taxpayer's tax
obligation would need to be taken from their paychecks.
But that is unlikely. Every taxpayer is affected a little differently
under the Tax Code based on their personal circumstances, and some
taxpayers' incomes may fluctuate throughout the year. This makes exact
withholding based on general tables nearly impossible. As a result, the
amount of a taxpayers' refund is unlikely to be exactly the same as it
was under the old law compared to our new law. Yes, some taxpayers may
see a smaller refund, but others may see a larger refund. The size of
one's refund tells you nothing about whether a specific taxpayer
benefited from last year's tax law.
Given this fact, the best way for any taxpayer to see how tax reform
affected their bottom line is to compare this year's tax return with
last year's tax return, rather than making that judgment based upon
what the refund is.
Tax preparers and tax return software often will provide an analysis
comparing the current and previous year's tax return. I encourage
taxpayers to compare the total amount of taxes paid this year with the
total taxes paid last year, or, if your income materially changed from
last year, compare your effective tax rate. That is the taxes paid as a
percentage of your adjusted gross income. If your tax preparer does not
already provide you with this information, simply ask them for that
information.
If taxpayers take this approach, the vast majority will see that
their tax bill has gone down. This is what matters, not the size of
their refund. The size of the refund tells you nothing beyond the
degree to which a taxpayer has overpaid their taxes over the course of
the year. I hope Americans will take the time to check so they know the
real effects that last year's tax cuts had on their lives and their
family.