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Monday, February 23, 2009

IRS Issues New Withholding Tables: $10 Extra Pay Per Week to Start April 1

The IRS on Saturday announced that it has issued new withholding tables to implement the Making Work Pay Tax Credit of 6.2% of earned income, up to $400 for single taxpayers and $800 for married couples.  Employers must start using these tables by April 1, but may do so earlier.  As Kay Bell notes, this works out to an extra $10 per week in take-home pay for most taxpayers.   Higher income taxpayers will not see an increase in their take-home pay, as the credit phases outb at $75,000 - $95,000 for single taxpayers and $150,000 - $190,000 for married couples.

For a pessimistic view of the value of the extra $10 per week, see Rick Santeli's now-famous rant on CNBC:

http://taxprof.typepad.com/taxprof_blog/2009/02/irs-issues-new-withholding-tables-10-extra-per-week-to-start-april-1.html

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Comments

And they're going to need it, considering the gross devaluation on the dollar that's coming. They will give you 10 dollars, then raise the cost of living by 50 dollars. It reminds me of something that happened when I was a kid. We asked the younger kids if they wanted the dime or the nickel. They always choose the nickel- be because it was bigger! Are the people really that stupid? God help us all if they are.

Posted by: Mike Adkison | Feb 23, 2009 8:25:34 AM

Whoopee. $10 a week will about offset the California tax increases in the sales and car taxes. Sacramento Ate My Stimulus.

Posted by: Tannim | Feb 23, 2009 9:57:53 AM

Ten smackeroos a week? Now my sister can have that operation!!

Posted by: Jeffersonian | Feb 23, 2009 10:59:55 AM

CHANGE!!! thats all we are getting, unless you're one of the Chosen Ones useful idiots.

The rest he just thinks are idiots.

Where is his birth certificate anyway? Or school records that would show if he received any scholarship/grants/loans for foreign born students?

I know Dems have problems releasing their records (Kerry/Gore--Stevenson---FDR----Cox, keeps on going) but this is ridiculous by now.

Posted by: swift boater | Feb 23, 2009 11:01:57 AM

For all its perceived might, what the Federal Government can actually do for us working masses is pretty pathetic. A healthy private sector is so much more important than the trinkets and glass beads the Feds can hand out.

Posted by: masstexodus | Feb 23, 2009 11:05:19 AM

Here is a plan that would really mean something: A simple basic, fiscally and morally responsible way to both stimulate the economy, provide mortgage relief, help banking, and stabilize housing.

My proposal would be as follows:

In addition to the current mortgage interest deduction, immediately for Federal taxes only enact a lump sum $6,000 yearly mortgage-payer Federal tax credit that applies to all current and future mortgages for a period of 5 years starting on Jan 1,2008.

Note: For those that are paying attention this assistance could be realized immediately and thus be stimulative by a $500 + / mos adjustment in their Federal withholding (so in effect they could capture Jan and Feb this year) and they could "spend" this money how they see fit. However, for those that require mortgage assistance or do not have a job at this time since this credit only goes to those that pay a mortgage it will provide help with this burden.

To pay for this credit instead of taking money from other purposes (or other taxpayers) and to discourage bad behavior such as speculation and flipping. Impose a Federal $5,000 lump sum Federal sales tax on the amount of a gross sale price on all existing home sales that are sold at a price 25% above the regional or State average home price (thus stabilizing prices particularly at the upper end and not penalizing as much the lower end of the housing price spectrum).

Only one $6,000 credit per year per household would be allowed so that second or vacation homes would not benefit and to receive this credit it must be a primary occupied residence.

This special sales tax would have an announced sunset in a minimum of ten years (or longer to sell as fiscally responsible - I like 15 or 20 years which would be half of the workout mortgages) and would encourage more folks to stay in their homes, stimulate workout mortgages over time (vs. forcing principal write down) and help folks pay their mortgages. Starting in the outlying 5 years of its implementation the threshold of relief from this tax at the time of sale would drop from 25% above the average home price by 5% a year so that incentives to raise or at least stabilize average prices to cover the sales tax increases will slowly occur.

This plan probably would not fiscally balance but putting it in the form of a credit and not a bailout does two things that I think are positive: One it does not cost taxpayers anything just the government and it allows us more control over our housing decisions. And, secondly, it provides an immediate stabilization for banks that are concerned about behind monthly payments and they could structure the additional portion of the payment towards principal as an incentive to work out more long term solutions on underwater mortgages.

This plan would apply to all mortgages and home owners of all race, color creed or political persuasion. Its beauty is its simplicity. It does not require 417 pages, just one or two lines on the tax form. My hope for you is that if you would propose this simple plan as is that you would receive a populist backing that would make your election day numbers look meager in the broad bi-partisanship support you would receive. What better way for change to come than with a simple proposal from one of the people for all of the people and not from someone in Washington or some special interest?

Glenn D. Miller Clayton, Ca.

Posted by: Glenn Miller | Feb 23, 2009 11:05:27 AM

What were they thinking???

It takes a certain, very rarified and refined stupidity found usually only in hallowed halls of an inbred academy or Congress to place any credence in such foolishness as this.

This recalls the old saw about Congress being composed of 535 persons of above average ignorance.

Posted by: Jeremy Wa | Feb 23, 2009 11:17:02 AM

I want my $10 now!!! I can't believe I have to wait until April...

Posted by: Michael Newton | Feb 23, 2009 11:28:27 AM

Ooh Jeremy, you are so wrong. After the next procedural vote, it's 537.

Posted by: comatus | Feb 23, 2009 12:18:10 PM

Brilliant plan, Glenn. Seriously. And it would work, too. That's why it'll never happen.

Posted by: Rob Springer | Feb 23, 2009 12:21:14 PM

A mouse in Nancy Pelosi's district gets 30 Billion dollars... but I get an extra $10 a week!
A pet project by now deposed Governor Blago gets 2 Billion dollars... but I still get that extra $10 a week!
Universities get 6 Billion dollars for construction done by union workers... but that $10 a week won't cover union dues.
The National Endowment for the arts gets 50 million dollars... but that $10 a week won't allow me to see a museum.
NASA gets 1 Billion for research in global warming... but I still get $10 a week.

I could go all day with this.

Posted by: Chaz706 | Feb 23, 2009 12:23:42 PM

How racist of Rick to oppose the Will of Obama!

Doesn't he know that it is patriotic to pay taxes?
Only hate filled ReThuglicans would complain about Obama trying to fix the mistake of Bu$Hitler Chimpy McHaliburtain.

Posted by: Borris | Feb 23, 2009 2:18:44 PM

Let me see how good my math is. The IRS(collection agency for the Federal Reserve) is going to take an extra ten bucks a week from me. Obama says we'll get $13 increase per pay period(every two weeks) That makes 40-26= 14. That's 14 in the RED. No wonder the kids are stupid

Posted by: Robert | Feb 24, 2009 1:02:10 PM

Does anyone know if these new tax rates apply to pension income?

Posted by: Madison | Mar 2, 2009 9:23:59 AM