Secretary of the Treasury Steven Mnuchin had a lot to say earlier today about President Trump's plan for tax reform and the budget. He touted the President's tax cuts as a way to kickstart the economy and echoed sentiments that the "average American should have simple taxes." But it was a quick comment about Tax Day that stood out for some. Implying that Tax Day was somehow more successful this year than in years past, Mnuchin remarked:
We had one of the largest days ever of collecting tax receipts on April 18. It was huge in both the absolute amount of money and the number of uh, things, that we transacted.
John Heltman of American Banker tweeted about the moment:
Heltman tweet
Twitter screenshotMnuchin was directly addressing a question about the debt ceiling and whether the government could avoid a shutdown. He answered by saying that he wasn't worried because "[w]e have the cash flow to manage the government" and went on to specifically reference Tax Day.
(You can watch his full speech on The Hill's website here. You can read more about Mnuchin's comments and the event here.)
But the implication was there: the idea that this tax season was somehow quite remarkable.
It was, I suppose, in some respects, but not because more taxpayers were filing their returns and paying taxes. In fact, it was quite the opposite. The 2017 tax season was marked by a decided lack of taxpayer enthusiasm: in 2016, the Internal Revenue Service (IRS) received 152,544,000 individual income tax returns through the end of the year with those numbers expected to be higher in 2017. Just a month before the Tax Day deadline, numbers from the IRS indicated that had only received about half of those 2016 totals.
Those "things that we transacted" - or tax returns filed - soared in the last week of the filing season primarily because they had lagged all season long. Some of the delay in filing was attributable to the "Protecting Americans from Tax Hikes (PATH) Act of 2015" which required the IRS to wait to issue refunds to taxpayers who claimed certain credits.
Some taxpayers may have been waiting to see whether Congress repealed the Affordable Care Act, or Obamacare, which would have eliminated the health care insurance penalty retroactively to 2016 and ushered in repeal of related taxes (that didn't happen because House Speaker Paul Ryan (R-WI) pulled the vote). It's also been suggested that taxpayers were waiting to see what might happen to tax reform efforts (Congress is still working on it).
Whatever the reason, the IRS received 12.5% of returns for the 2017 tax season during the week ending April 21. The IRS reported that they had received 135.6 million returns this year "following a late surge of filings." During the week ending April 21, the IRS received more than 17 million tax returns. Overall, however, the numbers of taxpayers who filed tax returns were actually down from last year by about one million.
This doesn't mean the downward trend will continue: taxpayers filed 11.6 million extensions in 2017, up 0.9% compared to the same time last year. Those returns will be due on October 15, 2017. Don't expect revenues to soar, however. Extensions give you extra time to file and not extra time to pay: taxpayers who expect to owe later should have included payment with their extension requests.
And while the IRS might have been collecting receipts, it was also paying out. The number of refunds issued this year has already exceeded those issued in 2016. Remember, however, that refunds may take longer to process and the total numbers of refunds (as well as the average refund) could increase as returns are processed.
So, it makes for a good soundbite but the numbers this year - both in terms of receipts and "things we transacted" - were not all that huge.
