this post was submitted on 10 Oct 2025
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You’re not actually making any money with tax refunds. What’s happening is that you’re paying too much in taxes and then you’re getting the money back up to a year later.
You’d be better off if you got to keep all of the money you were entitled to and only had to pay the taxes you owed. Then you wouldn’t have to wait all that time to get your money back.
Is that ideal scenario possible to achieve? If the amount is going to be wrong, I think that for most people with lower income, it's better that the government deducts too and refunds the excess rather than deducting too little and making you pay an extra bill every year.
Plus it helps people like me that are terrible at saving money. I purposefully asked my work to take extra taxes off my cheques so that I can get a slightly bigger tax refund.
I’m glad that works for you. For others with similar struggles, they treat the tax refund as a windfall and spend it on something they don’t need instead of putting it into their savings.
This is known as the mental accounting bias.
It absolutely is possible to achieve. It’s very simple (but politically difficult): we need to simplify the tax code.
The reason rich people pay less taxes is because of all the complicated deductions, exemptions, credits, and rebates. Low income people end up paying more (and getting it refunded) for very dumb reasons, such as seasonal jobs that don’t prorate the tax withholding (so eg they pay as if they earned that money for 12 months when they only worked for 3, causing them to pay taxes as if they earned 4x as much in a year) or simply being charged too much tax due to payroll mistakes.
There is also the issue of lower income people simply being unaware of deductions and tax credits they qualify for (and being more likely to not know about them). This can also be solved with tax code simplification: get rid of those credits and simply charge lower taxes at the lowest brackets (or even raise the minimum bracket higher so they don’t pay any tax at all).