Last year, when I filed my taxes I got a huge refund, so large that our summer plans suddenly opened up because we had extra money to use. I was confused by this because I don't have taxes deducted from my paycheck; an advantage to earning income overseas is that it is tax exempt, except for the payroll taxes. In fact the refund I got back actually exceeded my annual payroll deductions. I couldn't understand how this worked until I read this article
in the Wall Street Journal.
I have to say, in general, I am very uncomfortable with this tax policy. First of all, because, as the WSJ rightly says, it is welfare disguised as tax policy, so well disguised, in fact, that I wasn't aware that I was a beneficiary of welfare until I read the article.
Which leads me to my second problem. I don't want welfare, and don't feel I need it. I wouldn't apply for it even if I knew it were available for it. In this system, however, I have little choice to apply for it, since I have to file my tax claims. I'm sure I will continue to take the "tax refunds" I'm eligible for, since I have my tax claims prepared for me online, and don't have much to do with the actual details.
The fact that this has become a way for welfare to sneak back into the system, in a form much harder to resist than the old welfare system. WSJ rightly faults Obama for using this formulation as a way to claim that he is giving "tax cuts" to 95% of the American people.
I do believe in progressive tax rates, but this is silly. If you want to redistribute wealth, then do it above board. Welfare, though is so unpopular that it would never pass. If that's true, then it shouldn't be snuck into the tax system.