Tax refunds are lower for second week in a row
Average tax refunds this year are smaller than they were last year for the second straight week, the government said Thursday. The number of refunds the IRS has processed so far is also smaller than last year, according to new data it released.
The average refund paid in the second week of the filing season, which ended Feb. 8, was $1,949. That's down 8.7 percent from $2,135 a year earlier.
The drop may be largely due to how some employees and employers had adjusted the amounts withheld from paychecks after the law changes. Most taxpayers received a tax cut under the law, but they received it in the form of larger paychecks. Some may have had too little tax withheld and ended up with a smaller-than-expected refund, while 2.5 million more taxpayers owe tax, according to Treasury projections.
But the declines have become a political issue, as Democrats contend they show how the new Republican-written tax law hurts middle-class people.
"This thing was sold as a pot of gold, taxpayers thought there was a major windfall coming their way, and now that's not reality," Thomas Cooke, professor at Georgetown's McDonough School of Business, told CBS News recently. "They're looking at this year's refund, comparing it to last year, and seeing less. You tell them they got more money in their paycheck, well, that's yesterday's news."
Fewer people are getting refunds, too. The number of refunds issued so far is down 15 percent from this time last year, while the number of tax returns filed has dropped by just 7 percent.
Some analysts have raised concerns that smaller-than-expected tax refunds could ding middle-class spending, which would bring a bigger hit to economic growth.
--The Associated Press contributed reporting.