New report shows how the GOP tax scam could destabilize the budgets of millions of households

This year, sticker shock set in for many families as the GOP tax scam bill, passed at the end of 2017, reduced many people's tax refunds by hundreds or thousands of dollars, and took away some people's refunds entirely.

Republicans have claimed that this isn't really a bad thing at all — that it just means people are getting to keep more of their money in their paychecks in the first place. "Lower tax refunds show how the Republican tax cut is keeping money in your hands all year," tweeted Sen. John Cornyn (R-TX).

But a new study by the JPMorgan Chase institute, reported by the Washington Post, casts doubt on Republicans' blasé attitude about changing refunds. It turns out millions of households really do rely on that money coming back into their pocket at that exact time:

The average refund, which amounts to nearly six weeks' take-home pay for the typical household, is crucial to a family's financial stability, the JPMorgan Chase Institute study found. But in mid-February, the IRS said Americans could see their refunds diminish by as much as 9 percent this year because changes in the tax code have made it so less is withheld from paychecks. The change could have a ripple effect, as families depend on the tax season windfall to pay down debt, make major purchases or cover big outlays like out-of-pocket health care expenses.

"For about 30 percent of families, this ends up being the single largest cashflow infusion of the year," said Fiona Grieg, director of consumer research for the JP Morgan Chase Institute, who worked on the study. "This is really a moment that resets their spending levels ... it does play a key role in creating a savings buffer that families rely on for the better part of a year."

In an ideal economy, zero percent of workers would overwithhold and give the federal government an interest-free loan. They could simply save the money they want to have on hand. But that's not how the world works. When people get more money, they tend to spend more of it — and overwithholding to get a tax refund is one way some of that money is automatically saved, preventing some people from overspending or going into debt.

And that is even before the problem that the just because the GOP tax made withholding smaller, it didn't necessarily make it more accurate. Thanks to changes to itemized deductions, some 30 million people are at risk of underwithholding this year, meaning they will owe the IRS money, plus a 10 percent penalty on the extra tax liability (although the IRS has said it will forgive most of those fines this year.)

Republicans' tax law has proven to be a disaster all around — and the country is only beginning to feel its effects.