The smaller the tax refund, the better

Published 12:00 am Saturday, February 16, 2019

By Bobby Tingle


There are rumblings about tax refunds being so low this year.

Shouldn’t tax refunds be larger since the federal government cut our taxes?

You would certainly be right to think so.  Lower tax rates mean less tax paid and more refund.

Tax refunds, though, are a bit more than just tax rates.

Let’s say you earn $100 and your take home is $70.  For our example, imagine your medical and social security deductions were $10 and you paid $20 in federal taxes.

At the old tax rate of 15% at the end of the year you would expect a $5 tax refund.

With the new rate of 12% you now expect a refund of $8.

Sounds reasonable, the math is not complicated

But what if something else changes?

In this case, more did change.

Therefore employers had to revise their formula for calculating the amount of federal taxes you pay with each check.

Let’s say you still earned $100 but your take-home changed to $74.  Let’s say they still took out $10 for social security and medical coverage but only took out $16 for federal taxes.

Boom! You just got a $4 per paycheck increase in your take home!

So far so good, until you get to the end of the year and expect the $8 refund.

But at the end of the year, with a 12% tax rate, your refund drops to $4.

Hold on now, that is only half what I expected, and $1 less than my refund at the old tax rate.

The bottom line is you got $3 more than you did with the old rate.  Exactly what you should expect.

Ultimately our focus should be on the way taxes are being spent.  If we elect leaders would quit spending our great grandchildren’s paychecks, then taxes can go down for everyone.

Don’t hold your breath.


Golden Triangle Days in Austin


Orange County leaders just got back from our state capitol in Austin.  A contingent made the trek to attend Golden Triangle Days in Austin.

As I understand it, during each term the State of Texas legislature is in session, groups from around the state take turns meeting with lawmakers as they consider proposed legislation.

Assistant General Manager – Administration for Sabine River Authority Ann Galassi was among the contingent from Orange County.

Galassi appreciated the time and attention our state legislators were able to give them during this busy time.  The legislators only meet once every two years for a short period so their time is valuable.

The usual topics were discussed including education, health care and transportation.