As the Federal government shutdown stretches into its third week, there’s a growing risk that if it continues, tens of billions of dollars worth of income tax refunds could be delayed.
“This [shutdown] could even extend into months rather than weeks,” Capital Economics’ Chief US Economist Paul Ashworth told Yahoo.com. “Up to now, the economic cost has been limited. But the disruption will increase exponentially for every week the shutdown isn’t resolved, particularly if it delays the payment of tax refunds next month.”
Many taxpayers file much earlier than the April 15 deadline in order to pocket their refund checks sooner from the Internal Revenue Service. The longer the shutdown continues, the more refund checks that won’t be mailed back promptly.
“[The] longer the shutdown lasts, the more government services will grind to a halt. The IRS usually pays around $125 [billion] in tax refunds in February and a further $75 billion in March,” Ashworth wrote. “In [annualized] terms, that would be equivalent to an 11% decline in GDP.”
The IRS reports the average refund is about $3,000. For many Americans, that’s a huge sum that can be used to pay off Christmas debts or add to their savings accounts.
Huge numbers, indeed. The shutdown hurts the U.S. economy in expanding ways the longer it stretches.