It's tax season again – and as the saying goes, you can't please everybody.
For the first time in a century, Americans are limited in the amount of state and local taxes (SALT) they can write off to $10,000 – and in states like New Jersey, California, and Maryland, which have high income and property taxes, that can take a chunk out of a federal refund.
Still, policy analyst Andrew Wilford with National Taxpayers Union Foundation (NTUF) maintains there were good reasons to limit the SALT deduction.
"First of all, it's definitely a wealthy tax benefit," says Wilford. "Eighty-four percent of the benefits of the SALT deduction went towards those with incomes above $100,000 a year. It's not a middle-class tax deduction."
Wilford adds that "more importantly," it sort of blunts the impact of tax increases in high-tax states.
"It allows high-tax states to increase taxes while also telling their wealthy residents that it's not really a tax increase because you'll be able to write it off with the federal government," he explains. "So that was a big reason why it was important to limit the SALT deduction."
Meanwhile, The Associated Press is reporting that some taxpayers are not getting much back in terms of a refund. Wilford says that could change as more data comes in. Two weeks' worth of returns, particularly the first two weeks, are not representative of tax refund data on the whole, he explains.
He also suggests that people focus on their tax bill as opposed to how much they're getting back. "The amount of money you're actually paying in taxes is lower for 90 percent of American families," he adds.
And he writes (see link below): "Only one thing is for certain – refund sizes are a bad metric for evaluating the benefits of the tax reform law to the middle class."
Read article by Andrew Wilford:
What's going on with tax refunds?