Regardless, having a double digit percent of your income held hostage every year is not exactly a win for the worker. Rent is due on day 1, not day 365.
It's not a win, but it's only a problem for the first year of your employment. After the first year, you get the tax back, and you can use it to pay next year's rent.
Low wage and part time workers are typically not employed all year around. The tax back can be hard to predict in these conditions and vary quite dramatically. It's really hard to work with when one lives paycheck to paycheck and needs the money now.
Right, but then the problem is general lack of funds, not having them delayed by a year. With the exception of the first year of employment, one will have funds from previous year's tax return. I agree that this is annoying, but with minimum level of financial planning and responsibility (e.g. by withdrawing 1/26th of previous year's tax return every two weeks, or by withdrawing whatever fraction of the year one actually works), the effects of tax withholding can be almost completely mitigated.
Is your argument that low-wage and part-time workers are irresponsible and cannot be trusted with large windfalls of money around tax return time, because they will squander them faster than they would if the same amount instead was given to them via biweekly installments?
If you get significant tax back year after year and the delay causes you problems, increase your W-4 exemptions until that stops happening. There's no constraint on W-4 claims unless you've had tax consistently (which seems to mean for multiple years, though what the threshold is isn't clear) underwithheld, in which case the IRS may send a lock-in notice to your employer setting a minimum withholding level and preventing reductions, but if you have gotten any tax refund, you aren't having tax underwithheld, so that's not going to affect you.
I agree that many of the people who need to know this don't, though.
This is true, but but I've known a number of people in a similarly low-wage position who were never informed of that option until their 30s. I myself was only taught about that option at 20, two years into the workforce by a coworker.
Our education system often fails to deliver financial literacy and basic life skills to a large portion of the population, leaving them instead to overwhelmed parents trying to feed their families.
