Fri
May 1 2009
08:21 am
The "it's not a tax cut it's a loan" meme
By: R. Neal

I've noticed on some of the idiocracy blogs and even in a comment here that President Obama's recent middle class tax cut, the largest in U.S. history, is a scam because it's really a loan that you are going to have to pay back out of your refund.

Baloney.

continued...

It is a tax cut. Or more accurately, a tax credit. If your 2009 tax liability was X before, then it will now be Y where Y = X - your credit. That's a reduction in taxes in any system of mathematics I'm familiar with.

Instead of writing everyone a one time check, the IRS is adjusting withholding so the credit is paid out over time in the form of a reduction in withholding and a corresponding increase in employee paychecks (or a reduction in estimated tax payments for the self employed). So people are, you know, paying less taxes and keeping more of their own hard earned money in their pockets and whatnot.

What the teabaggers have seized on is a wrinkle in the withholding tables. They forget to mention that the same wrinkle has been there all along. It mostly affects people who work two jobs or married couples filing jointly.

Withholding tables provided to employers do not take into account the extra income from a second job or the income of a spouse when calculating the tax bracket on which to base withholding. The credit can compound this, especially if the combined income makes you ineligible.

It's always been that way. It's up to you to take, you know, personal responsibility and stuff to make sure you are having the appropriate amount withheld.

The way you do this is to fill out a W-4 and indicate your filing status and to increase or decrease the number of exemptions to adjust the withholding. You can also specify an additional amount to be withheld, if, for example, your income from a second job or your spouse's income would put you in a higher bracket.

The IRS has an online calculator that will determine if your withholding is appropriate and suggest the necessary adjustments if it isn't.

And finally, I have never understood why people look forward to a refund. It's like they think it's a savings or investment program. Or a nice bonus from the government. It's your money. The IRS isn't going to pay you interest on it so why let them use it for free? The optimum withholding results in zero net unpaid tax liability on April 15th.

Once again, the idiocracy needs better accountants. And they need to get their talking points from someone other than Rush Limbaugh and Fox News.

Topics:
bizgrrl's picture

It's up to you to take, you

Submitted by bizgrrl on Fri, 2009/05/01 - 8:56am.

It's up to you to take, you know, personal responsibility and stuff

Hah! Personal responsibility? No way...

Opinari's picture

This debate doesn't affect

Submitted by Opinari on Fri, 2009/05/01 - 6:46pm.

This debate doesn't affect me personally, but it should be pointed out that the Associated Press is reporting this same meme, not just the typical right wing news outlets.

INSIDE WASHINGTON: Taxpayers to get rude surprise

gonzone's picture

Actually

Submitted by gonzone on Fri, 2009/05/01 - 8:41pm.

Actually, the AP Washington bureau is a typical right wing media outlet. Reference John Solomon and Nedra Pickler as two examples. Been that way for years.

"If ignorance is bliss, why aren't more people happy?"

UT PoliProf's picture

Actually Reading the AP Article

Submitted by UT PoliProf (not verified) on Fri, 2009/05/01 - 10:11pm.

When you read the article it points out that the only ones who have to pay back the tax cut are those with unique/peculiar situations where they end up with two or three jobs and take the maximum credit at each. They are taking more than the full credit to begin with. If you just take the maximum at one job, it doesn't have to be paid back. Typical right-wing boiler-plate to make an issue out of something that isn't really an issue.

Mike Doig's picture

Sir, If you really believe

Submitted by Mike Doig (not verified) on Sun, 2009/05/03 - 9:25pm.

Sir,

If you really believe what you post - which is historical BS as far as economics works - can you please give facts!!

You are a tool!!

Why not really lower taxes on the people who pay them?

80-90% of the people who pay taxes are producers, people you hate and want to destroy - where exactly are these tax revenues going to come from. The middle class and poor who statistically pay very few taxes can not get a tax cut that will influence the market. Sorry to shatter your BS utopian BS dream, but it is the fact!!

How do you lower the taxes of those who don't pay income taxes?

How do you decrease the tax load on people who statistically don't pay income taxes?

How is an increase in any tax not eventually placed upon the consumer - rich or poor?

Please give me FACTS!!!!

NOT BS!!!

Where has Obama cut taxes for the middles class like he said he would do in "as soon as I get in the White House".?

Where is the transparency of government activity, or the withdrawal from Iraq Promised by the Obama?

Why does Obama keep appointing tax cheats then telling the American people we should, "Accept higher taxes" as a necessary progression to his socialization of America?

Is there anything Obama has done that you approve of - and if so, WHAT?

R. Neal's picture

80-90% of the people who pay

Submitted by R. Neal on Sun, 2009/05/03 - 9:51pm.

80-90% of the people who pay taxes are producers, people you hate and want to destroy

Uh, as a relatively successful independent small business person I count myself as a producer. Just as any guy who works for a living should count themselves as a producer.

I missed the part where I said I wanted to destroy producers. Please enlighten me. And please enlighten me on how the economy works. You appear to have some great insights.

Why not really lower taxes on the people who pay them?

Uh, Obama just did that. Like I said, you guys need better accountants or something.

Oh, wait. Were you talking about the top 1% who pay 90% of the taxes or whatever the Fox News BS talking point claim is? I though Dubya already took care of them. Worked out great for America, didn't it?

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