Tax Lawyer's Blog

Last April IRS Commissioner Doug Shulman told the National Press Club that tax season actually stimulates the economy. Here it is:

I concede that in March and April people probably shop with their tax refunds, but the idea that tax season – a time when Americans pay the government billions of dollars of their hard-earned money – is an economic stimulant is a bunch of hokum.

When a taxpayer gets a refund (i.e. the non-refundable kind) it means that he gave the government the interest free use of his money for a year. Consequently, one could rebut the Commissioner’s view of the economic value of taxes by arguing that their overpayment hurts rather than helps the economy because it takes taking money out of circulation for a year.

Or does Mr. Shulman expect us to believe that it is good for the economy that taxpayers lose spending power for twelve months (by paying the IRS more money than is required) just to gain spending power in March and April.

By the way, do you think it’s proper for the Commissioner to encourage taxpayers to overpay their taxes?

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