Why so many people are complaining that the Tax Cut screwed them

[Republic of Texas]

It turns out that while most people's taxes have been reduced, the withholding was reduced more. So million of taxpayers who are used to getting refunds will have to write a check to the IRS this year. And they don't like it one bit.

The new tax law does result in some people paying higher taxes (especially over the long term), but the specific issue here is tax refunds rather than total taxes paid. Whether you get a refund or owe extra to the IRS at filing time is a function not just of your total taxes owed, but also of how much tax is withheld from your paycheck by your employer on paydays. And the big story here is that as a result of the new tax law, the Treasury Department tweaked things so that on average taxpayers’ withholdings fell by more than their actual taxes owed.

This was all explained in a Government Accountability Office report last summer, but it turns out that many people are not regular readers of GAO reports and did not take the GAO’s official advice to check their withholding status. The result? Surprise tax bills!

 

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