Or they could invest the money into the stock market. I jumped in as soon as the stock market hit bottom. It was nice having the extra cash to do so... thanks partly to the fact that our government wasn’t confiscating it. And they weren’t because I’ve always kept my withholding to the absolute minimum.
Of course, I’ve got to actually cut a check to Uncle Sam every year in back taxes... but at least I’ve got the use of more of my money every year.
People who use the income-tax refund as a savings plan are earning a 0% interest on their money. Even a cr@ppy 1% interest CD is better than *THAT*.
And you argue the benefits of a 0% interest savings plan? Why?!?
Only if they wouldn’t have saved that money at all any other way.
Sure, if they had invested it, they could have earned that crappy 1% or less, but some people don’t have the self-control to do that and so find it easier to have it held out in the form of taxes and get a refund later that they’ll invest. A bigger amount is harder to blow that having that extra few dollars a week that will get spent.
Again, if that’s the way they want to do it, what’s it to anyone else? You may think it’s foolish and you wouldn’t do it, but it is their choice.