Policy Perspectives on Tax Refunds: An Economic Analysis of Government-Sponsored Debit-Card Refunds

The Bloomberg BNA Tax Management Weekly State Tax Report filters through current state developments and analyzes those critical to multistate tax planning.

State and federal governments have broadly expanded the use of information technology in handling tax refunds. In this article, John Friedman, assistant professor of public policy at the Harvard Kennedy School, details and analyzes the economic implications of several programs that offer tax refunds on debit cards. He concludes that, while government can certainly cut its own costs by switching to debit cards, the use of these cards is not costless to taxpayers. However, if taxpayers are to have the option of receiving their refunds via debit card, Professor Friedman argues that debit cards do not present a compelling case for the government's, rather than the private sector's, provision of this service.