I’ve heard the argument—on an uncomfortable number of occasions—that taxes can and should be raised since “most people get a refund anyway.”  What’s disconcerting about this statement is the use of the word “refund.”  It sounds as if the government is just handing out money every year without actually taxing anybody.

To clarify what a tax refund really is: it is the amount of taxes you overpaid during the course of the previous year.  In most jobs, your employer withholds a certain percentage of your paycheck based on your salary and exemptions you specified when you were hired.  This percentage is money that is paid to you, and then sent on your behalf to the government in the form of taxes.  So you are paying taxes every time you receive a paycheck.

When you get a refund, it is the amount you overpaid as was calculated by filling out a tax return.  So let’s say you paid $5000 in taxes, but receive a $750 tax refund.  Maybe in April it feels like you’re getting free money, but in reality you’ve effectively donated $4,250 to the U.S. Treasury.

Now, I do feel that many of us could and should afford to pay more taxes for government sanctioned movements to help those in need and stimulate the economy, but using the number of “refunds” American tax payers receive is not a good argument to start with.