How is it the only option? If withholding is less, what’s stopping people from saving the reduction? A refund is essentially an interest free loan repayment from the government. Refunds should ideally be zero.
It’s not but it’s a lot easier for many people if they don’t realize they have the money.
> If withholding is less, what’s stopping people from saving the reduction?
Reality. It’s no different then walking around town with a couples $20 bills vs walking around with your pockets empty. Sure you could just not spend any of it but it’s a hell of a lot easier if you don’t even have the option.
Not having cash on hand and being forced to make due with less is surprisingly effective.
I see why you reason like this as the reality seems counter-intuitive. The cause is poverty the effect is harder times taking economic sound decisions. Not the other way around.
One of the many articles about the topic: https://newrepublic.com/article/122887/poor-people-dont-have...