In fact, March retail sales declined, especially of furniture and appliances, two categories that normally benefit from tax refunds. To be sure, what could be bad for the economy might be good for the taxpayers themselves. Make me save. But while most people understand that, they still allow their employers to overwithhold taxes from their paychecks. People would rather be owed than owe.
People figure it's the only way they can make themselves save.
Nobody wants the IRS breathing down his or her neck. Plus, the IRS penalizes taxpayers who don't withhold enough taxes. Writing a check is more painful. But from past experience, most accountants discount these responses. They say that once a refund check is mailed, it's as good as spent.