12/29/2008

Obama's deceptive 'Tax Cuts'

According to a link from Instapundit, Obama is continuing his Bush impersonation by an effort to "push forward tax cuts despite economic crisis".

The linked article presents these details:

The incoming administration is considering tax cuts of $1,000 for couples and $500 for individuals that will be delivered by reducing the tax withheld from paychecks. That plan, which would cost about $140 billion over 2009-2010, would put more money in paychecks.
The funny thing is that as presented above (perhaps there are more details), this is not a tax cut. This is simply fewer $$ being withheld from paychecks, but the implications won't be apparent until April 2010.

As presented, this does nothing to change anyone's tax rate. So come Tax Day in 2010, people will find that their refund is reduced by $500-1000, or that they will have to dig up $500-1000 to help pay tax that they owe. While this will make people feel good by putting a *little* extra moola in their checks, it will also set them up for unexpected consequences....

It is possible that Obama could get corresponding lower tax rates passed by the end of 2009 and make them retroactive, but if he doesn't, many Americans may unexpectedly get stuck with lower refunds/higher taxes in 15 months.

Now ultimately this is simply government feel-goodery in action. Accomplishing something that people can already do for themselves. Withholding is optional people! Set your withholding to $0 if you want, but you will need to come up with some extra cash next April. Or if you do a little tax planning, you can adjust your withholding to match your circumstances. For instance, if you get big refunds every year, that means you are giving the government interest-free loans each and every month, until you get that money back a year later. If that is the case, go fill out an IRS Form W-4, and reduce your withholding so that you get more money in your paycheck now.

America, you don't need to wait for Team Obama to do the work for you! But unfortunately, I think many of you want them to.....

2 comments:

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