GOP senator: Your smaller tax refund is not the point

The IRS’s initial reports of lower tax refunds has colored the Tax Cuts and Jobs Act, a key Republican achievement, in a negative light. And it’s been irritating Republican Sen. Chuck Grassley of Iowa.

Speaking to reporters on Feb. 13, the Senate Finance Committee chair was frustrated about the messaging around tax season.

"Isn’t it kind of stupid to look at a refund,” Grassley mused. “What your refund is — that doesn’t tell you what taxes you pay."

Though a refund would provide an indication of tax level in instances in which someone does not change their withholding after a change in the tax law, Grassley is right. A refund is not the same thing as a tax bill.

RELATED: States where Americans pay the highest state income taxes

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States where Americans pay the highest in state income taxes
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States where Americans pay the highest in state income taxes

California

State income tax: 1% to 13.3% 

Maine

State income tax: 5.8% to 10.15%

Oregon

State income tax: 5% to 9.9%

Minnesota

State income tax: 5.35% to 9.85%

Iowa

State income tax: 0.36% to 8.98%

New Jersey

State income tax: 1.4% to 8.97%

Vermont

State income tax: 3.55% to 8.95%

Washington, DC

State income tax: 4% to 8.95%

New York

State income tax: 4% to 8.82%

Hawaii

State income tax: 1.4% to 8.25%

Wisconsin

State income tax: 4% to 7.65%

Idaho

State income tax: 1.6% to 7.4%

South Carolina

State income tax: 0% to 7%

Connecticut

State income tax: 3% to 6.99%

Arkansas

State income tax: 0.9% to 6.9%

Montana

State income tax: 1% to 6.9%

Nebraska

State income tax: 2.46% to 6.84%

Delaware

State income tax: 2.2% to 6.6%

West Virginia

State income tax: 3% to 6.5%

Georgia

State income tax: 1% to 6%

Kentucky

State income tax: 2% to 6%

Louisiana

State income tax: 2% to 6%

Missouri

State income tax: 1.5% to 6%

Rhode Island

State income tax: 3.75% to 5.99%

Maryland

State income tax: 2% to 5.75%

North Carolina

State income tax: 5.75%

Virginia

State income tax: 2% to 5.75%

Oklahoma

State income tax: 0.5% to 5.25%

Massachusetts

State income tax: 5.1%

Alabama

State income tax: 2% to 5%

Mississippi

State income tax: 3% to 5%

Utah

State income tax: 5%

Ohio

State income tax: 0.495% to 4.997%

New Mexico

State income tax: 1.7% to 4.9%

Colorado

State income tax: 4.63%

Kansas

State income tax: 2.7% to 4.6%

Arizona

State income tax: 2.59% to 4.54%

Michigan

State income tax: 4.25%

Illinois

State income tax: 3.75%

Indiana

State income tax: 3.3%

Pennsylvania

State income tax: 3.07%

North Dakota

State income tax: 1.1% to 2.9%

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"What taxes you pay is: compare what you’re going to do in 2019 vs what you did in 2018. The bottom line is the answer," he said. "I’m frustrated that people as individual taxpayers may think their refund is the answer to how much taxes they actually paid.”

Grassley continued, noting he was more frustrated with “well-educated” politicians, who are “leading the public to believe that their refund has to do with the amount of taxes they’re actually paying.”

For many people who are in high-tax states, the state and local tax (SALT) deduction’s new cap will cause lots of tax bills to rise. But in others, the higher standard deduction and lower tax brackets will result in tax savings.

But perhaps one of the primary causes of the refund turmoil was the IRS’s botched withholding tables. According to a report from the Government Accountability Office released in August 2018, over 20% of Americans aren’t withholding enough money in their paychecks, and thus would end up owing money to the IRS at tax time.

A recent note from UBS’s economics team may put it best: “Nobody—not us, not other economists, not the US government—knows whether refunds will be larger or smaller than in past years.”

Ethan Wolff-Mann is a writer at Yahoo Finance focusing on consumer issues, personal finance, retail, airlines, and more. Follow him on Twitter @ewolffmann.

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