Obama's "Make Work Pay" tax cuts for low and middle income workers...
In a rather heated debate with some friends at my house a few nights ago, the topic of Obama’s tax cuts came up. What one person was talking about seemed much different from what I’d understood about his plans. Is there something online somewhere outlining which tax brackets will be affected in what way?
I’m trying to Google it but something with my work internet connection is acting up and Google doesn’t want to work very well… normally I’d just wait but I know that a number of you always seem to know where to find just the right resources online for political information, so if anyone had a site handy, I’d appreciate it. Assuming what I’m looking for exists, that is.
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12 Answers
Does he have to submit this through Congress or is it just an automatic thing he can do? Is Congress supportive of this?
@Michael: basically he said that even I’m going to get screwed in taxes, so that people who make $18k or less get the extra they’re taking from me. I could’ve sworn that the middle-income workers were also going to get a break. I only make $27k a year (this is without OT. The OT I’ve worked will put me well over $30k, but still), so I was pretty sure that I wasn’t going to get taxed more.
Everyone should get a tax cut if their income is below $150K under the plan as it’s laid out. What hasn’t been decided yet is how the tax break will be applied: whether employers will withhold less taxes or taxpayers will claim the break when they file.
I don’t think the plan would have the desired effect if you had to wait until filing to claim the break. People need that money throughout the year, not in a chunk.
@poofandmook You’re gonna get a tax cut. The “Making Work Pay” credit is simple: if you are single make more than about $8000 and less than $75,000 you will get a $500 refundable credit on your taxes. That means that if you owe nothing at the end of the year, you still get a $500 check. If you were supposed to owe $1000, then now you’ll only owe $500.
If you make less than about $8000, then your credit is 6.2% of your income. If you make more than $75,000 ($150,000 if married and filing jointly), you get a reduced credit up to about $87,500. If you make more than that, you’re not eligible.
So, for your case specifically, you say you make “well-over” 30k. Let’s assume for the moment, that you make $35,000 a year and that you file your taxes individually. Your income puts you right smack in the wheelhouse for the Making Work Pay credit, and you will get a $500 cut in your taxes. If that reduces your tax liability to less than zero, which it very well might, then you will get the remainder back in the form of a refund check!
Your friend is wrong.
@miasmom The plan must be passed by Congress and then signed into law by President Obama. The first steps in this process have already begun. The relevant committee in the House of Representatives has passed an economic recovery package that includes the Making Work Pay credit. The relevant Senate committee is slated to take it up this week. I wouldn’t be surprised to see the full packaged on the President’s desk within weeks.
@Michael: Thanks so much for explaining all that. I’ll be the first to admit that finance is not my thing, so the tax cuts didn’t make sense to me other than I should benefit from them.
No sweat.
Taxes are pretty much the most complicated thing in public policy.
Next time you see some talking head on CNN spouting off about tax policy, just remember, he probably has never done his own taxes, let alone have any real understanding of the broader policy issues.
Do you realize now according to the newest tax tables, withholding tax, which used to start at $161 a week, now starts at $0? You’re going to lose 7.6% of that first dollar. Is this making work pay?
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