Somebody tell Larry Summers: it’s the tax refunds, stupid

IRS has a special website to promote the Earned Income Tax Credit. EITC is a credit for people who do not earn high incomes. EITC can reduce your taxes, and result in a refund. In simple terms, workers keep more of what they earn.Larry Summers, the Obama administration’s director of the National Economic Council, addressed a forum Mar. 13 and he said consumer spending in the U.S. appears to have stabilized. It would be a good thing if the administration’s economic whizzes stabilized. Summers’ remarks indicate a complete disconnect with real people. Here’s why. It’s mid-March, right? And if you’re in a lucky tax bracket, what do you do? You file your tax return early because you will probably get a refund if you’ve withheld more than you owe. I hate that word ‘refund,’ by the way. They should call it a tax overpayment. Somebody should tell Summers, “It’s the tax refunds, stupid.” Take a look at what IRS said today.

Here’s an announcement from the Internal Revenue Service website:

Taxpayers are e-filing their Federal income tax returns from their home computers in record numbers this year the IRS announced today. As of March 6, more than 18 million income tax returns were filed from home computers, up 20 percent compared to the same time last year.

So far this year, almost 52 million tax returns have been e-filed, up 6 percent compared to the same time last year. However, the number of people using IRS Free File has fallen from almost 3 million last year to just under 2 million for the same time this year, a reduction of about 30 percent. A number of factors could be causing the decrease in Free File volumes, including national advertising of other free online tax preparation offers and the elimination of electronic filing fees by some software providers.

As of March 6, about 91 percent of tax returns resulted in a refund. This percentage however is usually at its highest at the start of the filing season because taxpayers expecting refunds usually file earlier than taxpayer who must make a payment.