NEWS BLOG (WSAU) Ask anyone who sells cars, furniture, mattresses or electronics. Tax refunds are a good thing. Many of us get extra money in our pockets, and we might be inclined to spend it on a big-ticket item. Never mind that we’re only being refunded the amount we overpaid in taxes, essentially giving the government a free loan with our money for the year.
But recently there’s been a lot of debate over taxes, spending, and the deficit. Tax-filing day is a fine time to illustrate how out-of-control federal spending is, and how the only solution is to cut spending. We can’t tax our way out of this problem.
So – what if – our entire nation was forced to give up its tax refunds for a year because the government needs the money more than we do. No money from the IRS. Uncle Sam keeps it all.
Would that wipe out the deficit for this year? No. Not even close.
Our deficit this year is about $1.3-trillion. The IRS will refund about $480-billion to taxpayers this year. So confiscating everyone’s refund will reduce our budget shortfall by about one-third.
Now suppose, somehow, our federal budget was in-balance. Then – another ‘what-if’ – the government says everyone’s tax refunds will be used to pay down our staggering national debt. You’d have to go without a refund for 33-years (probably the rest of your working life) before our nation pays off its creditors.
Keep this in mind the next time someone tells you that a tweak to the tax code or eliminating this-or-that deduction will help our nation’s finances. Remember, the problem is much, much bigger than that.