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This is something that has been puzzling to me for some time and I'm just now getting my mind wrapped around it.. Tax code is NEVER an easy subject to grapple with (by design) and I'm certainly no accountant! LMAO
What I am finding as I look into this matter is downright SCARY!
PLEASE read this story from yesterday's local newspaper before you continue.. Entitled "Slow Start" here but "Tax cut has little impact on economy in January" here
There was NO tax cut! In fact there was/is a tax INCREASE on the lowest income earners in the country at a time when they are experiencing the most stress financially!
You saw NO mention at all of this in the above article! Is this an intentional "lie" via omission of fact?! OR should we simply realize and accept that so-called "economists" simply do not have a f'ing CLUE what is really going on?! It has to be one or the other as I will demonstrate!
PLEASE bare with me on this post as I realize it may end up being longer than I might like.. But it is very important to understand how Washington and their economists are LYING to the people of the United States! Either intentionally, if you prefer conspiracies, or through gross negligence and ineptitude.
By MARTIN CRUTSINGER and DAVID PITT, "AP Business Writers" Martin Crutsinger And David Pitt, Ap Business Writers – Mon Feb 28, 4:38 pm ET
"WASHINGTON – A Social Security tax cut that "economists" say should "help the economy this year" is off to a slow start. Consumers increased their spending last month at the weakest pace since June, even with the extra money in their paychecks" (There IS no EXTRA money in their paychecks!).
"Personal finance experts" say the real test of the tax cuts impact will come this spring, when the Easter holiday sales begin.
The increased income is part of an additional $110 billion that "economists" say workers will receive this year from the cut in their Social Security taxes. "Most families" will see about $1,000 to $2,000 in extra income. (That most families will see more money in their checks is either an extreme conspiracy among "economists" or a bald faced LIE!)
""Economists" said the extra spending would help boost growth and could lead businesses to hire more."
"It doesn't look like the economy is going to get any strong net boost from the Social Security tax cut," said Paul Dales, senior economist at Capital Economics. "It will just go to pay higher prices on food and energy." (There IS no [net] tax cut and higher food and energy costs will only PILE ON to the troubles faced by low income Americans.
"One factor that the report doesn't take into account is how much was spent on reducing debt. Households may have boosted their spending in December — after hearing about the pending tax cut — and spent the extra money in January to pay credit card bills." (BULLSH*T! The one factor the report did NOT take into account is the FACT that taxes went UP not down! ESPECIALLY for lower income earners who can LEAST afford it!)
"When people get these types of "paycheck boosts from the government", typically the first area people will spend on is essentials for the family," Jain said, professor of marketing research at the University at Buffalo School of Management. (As I will demonstrate there was NO paycheck boost from the government!)
Here is a discussion I had with an "Intuit Payroll Services specialist" at Intuit this morning..
Chat Information Thank you for chatting with us today!
While you wait for an Intuit Payroll Services specialist to join this chat, please enjoy this video about recent regulation changes that may affect your payroll.
Your payroll specialist will be with you shortly.
Chat Information You're now chatting with 'Intuit Payroll Services specialist'.
Intuit Payroll Services specialist: Hi there! Welcome to Intuit Payroll Chat Support. One moment while I review your question.
Gregory Phillips: Sure.. thank you
Intuit Payroll Services specialist: I will be happy to help you with your question. I may also have some clarifying questions for you.
Gregory Phillips: Sure that would be great
Intuit Payroll Services specialist: The tax tables themselves didn't actually increase this year. There was a Making Work Pay credit that ended at the end of 2010 which is why some people are seeing an increase in federal withholding.
Intuit Payroll Services specialist: However, to answer your question, in some cases it will be wash.
Gregory Phillips: I'm just a little confused when I see the 2% tax cut is expected to boost consumer spending and also see the making work pay credit expired and wonder do those two not pretty much just cancel each other out?
Intuit Payroll Services specialist: The federal withholding increase may be more or less than the 2%. It won't be the same for everyone since it is based on a variety of factors.
Gregory Phillips: Any idea of maybe a rough percentage on how many people will find their paycheck to be about the same size?
Gregory Phillips: Rough guess?
Gregory Phillips: I guess what I am wondering is how many people will be affected by the expiration of the tax credit on a percentage basis..
Intuit Payroll Services specialist: There isn't really a way to do a rough percentage for this type of tax. It would be fair to say that any employee that has federal withholding calculating now would be impacted.
Gregory Phillips: So virtually everyone will see their tax withholding increase? Is that a fair statement?
Intuit Payroll Services specialist: That is what I would expect. If you wanted to have something to show the employees, they can always look at the Publication 15 for the IRS to see what the tax should be.
Intuit Payroll Services specialist: Please click here to view the Publication 15.
Gregory Phillips: Ok I'll let you get back to work as I don't want to keep you tied up.. But one more question.. Is it fair to say that the increase in the federal withholding cancels out the social security 2% tax cut for the majority of tax payers?
Intuit Payroll Services specialist: I can't honestly say since it isn't a flat calculation. In my experience, most people are experiencing more than a 2% increase in federal withholding.
Gregory Phillips: Ok thank you very much for your time I truly appreciate it
Wow! Blows my mind..
The federal withholding increase may be more or less than the 2%.
It would be fair to say that any employee that has federal withholding calculating now would be impacted.
Gregory Phillips: So virtually everyone will see their tax withholding increase? Is that a fair statement?
Intuit Payroll Services specialist: That is what I would expect.
In my experience, most people are experiencing more than a 2% increase in federal withholding.
From another source..
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This year only, Social Security withholding is 4.2 percent, down from the 6.2-percent rate where it's been for several years. It affects all eligible earnings up to $106,800 annually per person. The new tax reduction is worth up to $41.08 per week, $2,136 per year, for a wage earner with $106,800 or more. A wage-earner making $50,000 in taxable income would gain an additional $19.23 per week, or $1,000 over the course of the year.
However, many middle- and lower-income taxpayers may not see that big a bounce in their take-home. That's because at the same time the Social Security tax cut was implemented, the Making Work Pay Tax Credit, worth up to $400 per person, was eliminated. That credit was available to individuals making up to $75,000, and married couples making up to $150,000.
As we've reported, taxpayers making $20,000 or less actually will take home less this year with the Social Security tax cut replacing the Making Work Pay Credit. "Some lower-income workers may enjoy more of an immediate benefit under the social security tax reduction than they did under the Making Work Pay Credit, but not necessarily more of an overall tax savings," Mezistrano notes.
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And perhaps the clearest statement of actual fact that I found here and in it's entirety below..
A number of people have noticed changes in their paychecks this month as result of the 2% payroll tax cut and expiry of the Making Work Pay tax credit. While the Obama administration had touted the 2011-2012 tax cut/new stimulus package extension as legislation that will benefit 95% of Americans, the sad truth is that the tax cut and credit expiry have in fact left low income earners (< $20,000 gross income) worse off.
For taxpayers making less than $20,000 a year ($40,000 for couples), the 2% payroll tax cut will turn out to be a tax hike when you factor in the expiry of the making work pay credit; which provided a flat $400 off federal withholding taxes to single filers and $800 to joint filers (and who earned less than $75/$150K) . Under the new tax laws, workers making $15,000 a year, for example, will pay $100 more in taxes during 2011 than in 2010. And if they file a joint return, they will pay $500 more. Those earning less could be hit even harder.
High Income earners benefit: Those who take home big paychecks, however, will see more money this year. A couple making $250,000 combined didn’t even qualify to collect the Making Work Pay credit, but this year, they could get a tax break worth more than $4,200.
51 million Americans will pay more in taxes this year than last year, according to the Urban-Brookings Tax Policy Center, including about 41 million low-income workers, half of whom make less than $19,000. Meanwhile, of the 72 million taxpayers who will benefit, nearly 40 million make more than $65,000. The payroll credit will put an estimated $110 billion into taxpayers’ pockets this year, almost twice as much as the $60 billion they got through Making Work Pay. But because much of the money from the payroll credit is going to higher income taxpayers, it might not be as effective as the Making Work Pay. (Detroit News)
I have also received a number of comments on this topic from people understandably confused about why their paychecks were smaller in January. The reason these folks saw a drop in their take home pay is primarily explained by the above and unfortunately unless they can increase their income they will have less take home pay for the foreseeable future. Everyone’s pay situation is different based on withholdings and employer sponsored benefits, so make sure you carefully review your paycheck to determine the impact of the new tax laws.
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So which is it?!
Is it REALLY a huge government / economists conspiracy to mislead the American people into THINKING their taxes have been cut when in reality they have been INCREASED for the foreseeable future?!
OR are the people involved in government and well trained "economists" so inept and uninformed that they REALLY don't have a f'ing CLUE what is going on?!
Either way it's not a very good "sign"..
The point of this post is that taxes were actually INCREASED on that portion of American taxpayers who can least afford it! And major governmental officials and educated professional economists are either intentionally LYING about this FACT or are so incredibly uninformed and ineffective that they have NO BUSINESS projecting ANYTHING!
Greg
Matthew 25:40 "Verily I say unto you, Inasmuch as ye have done [it] unto one of the least of these my brethren, ye have done [it] unto me."
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