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<\/p>\nRUSH: I have three sound bites here from well-known media figures who are complaining that their income tax refunds are much smaller than they thought they were going to be. And they are really, really confused because they said that they heard Trump talking about how this tax cut was gonna mean all kinds of more money for more people.<\/p>\n
Now, I don\u2019t play these sound bites to embarrass these people, but they said what you\u2019re gonna hear on national television. And I want to use what they\u2019ve said as an opportunity, teachable moment.<\/p>\n
<\/p>\n
So we\u2019re gonna start yesterday afternoon, CNN\u2019s Newsroom. The infobabe is Brooke Baldwin. And she has as a guest a guy named Jim Tankersley. Jim Tankersley is the tax and economics correspondent for the New York Times. And she brought this guy in, a reporter, she brought this guy in to ask him why her refund is smaller than it has been in recent years.<\/p>\n
BALDWIN: I went to my new CPA the other day and I was like, “Wait. What are you telling me? I can\u2019t deduct X, Y, and Z anymore?” I mean, why will people\u2019s refunds be so much smaller?<\/p>\n
TANKERSLEY: Well, your refund is not necessarily an indication of how much of a tax cut you got. It\u2019s an indication of how much money you gave the government during the year compared to how much you actually owe. So it looks like for some people, at least in the early returns so far, that\u2019s meant they\u2019re getting less back, which in some ways is good. It means you\u2019re not giving the government a loan during the year —<\/p>\n
BALDWIN: Sure.<\/p>\n
TANKERSLEY: — on money that\u2019s actually yours. In other ways, it\u2019s very bad if you\u2019re counting on that money and, oh, surprise, it\u2019s not there.<\/p>\n
RUSH: Now, her next question, she kind of betrays her confusion here. And the question, it\u2019s kind of difficult to understand, but the guy goes ahead and answers it anyway. Now, I\u2019m gonna explain what this is all about after the sound bite. Here we go.<\/p>\n
BALDWIN: The whole tax overhaul was supposed to be the Republican Party and the president\u2019s signature accomplishment. And how will the — the, you know, lower refunds impact what they wanted?<\/p>\n
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TANKERSLEY:\u00a0\u00a0Well, so, there\u2019s a couple of ways that you could look at it.\u00a0\u00a0One is, people might be really angry because they have lower refunds than they were expecting or they have an unexpected tax bill, which is something that (stammering), at least anecdotally, we\u2019re hearing that\u2019s happening to some people.\u00a0\u00a0On the other hand, their hope had been that people were seeing fatter paychecks throughout the year because they had less money withheld.\u00a0\u00a0If it\u2019s not a strong refund season, that\u2019s, sort of, one more chance missed for Republicans for the popularity of the law, no matter what the economics of it are.<\/p>\n
RUSH:\u00a0\u00a0Okay.\u00a0\u00a0Now, this second question was… As I say, it\u2019s kind of hard to figure out what she\u2019s asking, always I know.\u00a0\u00a0“The whole tax overall supposed to be the Republican Party, the president\u2019s signature accomplishment and how will, uh, you know, uh, the lower refunds impact, uh, you know, what they wanted?”\u00a0\u00a0This… I\u2019ve known people my whole life — and I\u2019m sure you do, too — when they get their tax refund and they wave it around at you and they brag.<\/p>\n
“Look at how much the government sent me! Look how much!” They want you to believe, not, “Look how much I was able to,” not cheat the government, but, “Look at the tricks I was able to use,” and those generally have not understood why their refund is large, and it all goes back to the W-4 when they sign up for employment. “How much do you want withheld from your paycheck every week based on your dependent status?” Most people have more than necessary withheld, A, to play it safe and B to get a big refund because the big refund is a sizable amount of money.<\/p>\n
In many people\u2019s cases, unless you get a refund of a $1,000 or $750 or more, most people never have that large an amount of money at one time.\u00a0\u00a0So that\u2019s how they get it.\u00a0\u00a0They don\u2019t realize that the only reason that they are getting that money is because they have had way too much deducted and the government has been able to use their money interest free all year in exchange for them getting that so-called big refund back.\u00a0\u00a0Now, her refund is smaller than she thought, and it\u2019s probably because of the deduction tables changing with tax reform.<\/p>\n
But, more than that, she works and lives in New York — and, of course, she\u2019s not allowed to deduct more than $10,000 of her state taxes under Trump tax reform.\u00a0\u00a0This is what Andrew Cuomo and the rest of these clowns in California, New York, and Illinois are bent out of shape about. Because, if you live in a state with a top tax rate of 14% and you can deduct most of that from your federal return, then you\u2019re essentially being subsidized.\u00a0\u00a0It allowed those states to charge outlandish income tax rates.\u00a0\u00a0Well, that all changed.<\/p>\n
Now there\u2019s a maximum $10,000 state, local tax deduction, which means nobody is subsidizing your state and local taxes.\u00a0\u00a0You\u2019ve now gotta pay \u2019em, and it will show up on your federal return, because you\u2019ve gotta account for that in your deductions, and, if you don\u2019t account for that in your deductions and you live in one of these states ,as she does, then her refund\u2019s gonna be smaller.\u00a0\u00a0She wants to blame it on Trump and lying about tax reform and how it was gonna give people much more than they had.<\/p>\n
And it all adds up to the fact she just doesn\u2019t — I\u2019m assuming she doesn\u2019t quite understand.\u00a0\u00a0Although she said she\u2019s got a CPA, and he would have had to explain it to her.\u00a0\u00a0There\u2019s one more here from Michael Strahan. This was Good Morning America this morning, and he\u2019s got the chief business economics and technology correspondent for ABC News, Rebecca Jarvis, and they, too, are obsessed with their smaller tax refunds this year and they\u2019re wondering what the heck is going on.<\/p>\n
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STRAHAN:\u00a0\u00a0It\u2019s a reality check.\u00a0\u00a0Eighty percent of Americans received a tax cut.\u00a0\u00a0Why are refunds smaller?<\/p>\n
JARVIS:\u00a0\u00a0So, basically, in those paychecks, people got a little bit more.\u00a0\u00a0Think about it like this: If you got $40 extra in your paycheck each week, that would be about a thousand dollars more over the course of a year.<\/p>\n
STEPHANOPOULOS: Mmmm!<\/p>\n
JARVIS Instead of seeing it in the refund check, you got it in the paycheck, but you might not have noticed it along the way.<\/p>\n
STRAHAN:\u00a0\u00a0You thought you were getting it there at the end of the year.<\/p>\n
(laughing)<\/p>\n
JARVIS: People like…<\/p>\n
(crosstalk)<\/p>\n
JARVIS: People like that little refund.<\/p>\n
STEPHANOPOULOS: I\u2019m gonna get that little check!<\/p>\n
JARVIS: Yeah!<\/p>\n
RUSH:\u00a0\u00a0Okay.\u00a0\u00a0So they\u2019re trying to explain to people why their refunds are smaller.\u00a0\u00a0That explanation actually made more sense than the other one.\u00a0\u00a0But I have found over the years that people who like the large refund don\u2019t fully understand why it\u2019s large.\u00a0\u00a0They don\u2019t get the concept that they\u2019re overpaying their taxes during the year.\u00a0\u00a0And when you tell \u2019em, they\u2019re fine with it, because they still like that gigantic lump sum every spring that they get in the form of a refund.\u00a0\u00a0The perfect…<\/p>\n
I mean, if you want to be fiscally responsible, if you have any discipline, the perfect tax refund is zero.\u00a0\u00a0That means the government has not withheld a dime more than you owe, and that you have had control of all of your money the whole year rather than giving a whole bunch more than the government is gonna be owed. You\u2019ve given it to them. You\u2019ve let them use it and have it.\u00a0\u00a0The point is, you haven\u2019t used it. You haven\u2019t had it to invest places that it might grow.<\/p>\n
And this is a trick.\u00a0\u00a0This is a trick of the whole tax code.\u00a0\u00a0The government wants your money more than they want you to have it, and if they can trick you into chalking up a huge amount of deductions so that they withhold less and less, so you end up giving them a lot more of your money than you\u2019re actually gonna owe them?<\/p>\n
That\u2019s a deal they will make every day of the year, and you couple that with the natural intimidation people have of the IRS — the fear of the IRS — and so they will deduct even more than they have to just to show that they\u2019re willing to compromise and that they\u2019re not trying to cheat anybody.\u00a0\u00a0They\u2019ve really got a smart deal going, the government does on all this.<\/p>\n","protected":false},"excerpt":{"rendered":"
RUSH: I have found over the years that people who like the large refund don't fully understand why it's large.\u00a0\u00a0<\/p>\n","protected":false},"author":49,"featured_media":299588,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","ngg_post_thumbnail":0},"categories":[12,1],"tags":[],"yoast_head":"\n