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May 01, 2009

Obama Lied, Taxpayers Cried: Obama's Vaunted "Tax Cut" for Many Will Be Taken Back on Tax Day

As many commenters pointed out (and I, lazily, never highlighted or researched), Obama's "tax cuts" are, for many, merely reductions in the taxes withheld by the government -- but you still owe them to the government when you file your taxes. Obama's "giving" you back your own money... at least for a while, until it's time to crunch your returns. At which point you discover you owe some or even all of that money he "gave" you back to the federal government.

Those who have been pounding this point can take some satisfaction in it finally getting some minor play in the media.

In the AP, of all places.

–A single worker with two jobs making $20,000 a year at each job will get a $400 boost in take-home pay at each of them, for a total of $800. That worker, however, is eligible for a maximum credit of $400, so the remaining $400 will have to be paid back at tax time — either through a smaller refund or a payment to the IRS.

The IRS recognized there could be a similar problem for married couples if both spouses work, so it adjusted the withholding tables. The fix, however, was imperfect.

– A married couple with a combined income of $50,000 is eligible for an $800 credit. However, if both spouses work and make more than $13,000, the new withholding tables give them each a $600 boost — for a total of $1,200.

There were 33 million married couples in 2008 in which both spouses worked. That’s 55 percent of all married couples, according to the Census Bureau.

– A single college student with a part-time job making $10,000 would get a $400 boost in pay. However, if that student is claimed as a dependent on a parent’s tax return, she doesn’t qualify for the credit and would have to repay it when she files next year.

Some retirees face even bigger headaches.

Obama's giving most a tiny tax cut, plus a tiny short-term loan. Something to be grateful for, I suppose, but considerably less than advertised.

But Obama's kept this secret better than the names and faces of the CIA interrogation experts:

The Internal Revenue Service acknowledges problems with the withholding tables but has done little to warn average taxpayers.

"They need to get the Goodyear blimp out there on this," said Tom Ochsenschlager, vice president of taxation for the American Institute of Certified Public Accountants.

For many, the new tax tables will simply mean smaller-than-expected tax refunds next year, IRS spokesman Terry Lemons said. The average refund was nearly $2,700 this year.

But taxpayers who calculate their withholding so they get only small refunds could face an unwelcome tax bill next April, said Jackie Perlman, an analyst with the Tax Institute at H&R Block.

"They are going to get a surprise," she said.

Incidentally -- this has been known for months. My commenters sure-damn knew it.

Why is the Enchanted Media (TM) so late to the table? Was it politically unsafe to mention this when Obama was ramming his "tax-cutting" Spendulus down our throats?

I guess it's safe to debate the merits of the legislation, now that it's already been passed.

The article makes it sound as if the only problem here is strictly one of accounting. In fact, there is a huge political dimension they deliberately missed as well -- this "tax cut" has been greatly, and dishonestly, oversold to the American public, which believes -- courtesy of Enchanted Media (TM) collusion -- that they actually get to keep the tax cuts Obama promised them.

This is how it works now in 2009, I suppose. The media takes a support-first, ask-questions-later view of the rules of reportorial engagement.

Hmmm... Is the AP now burying bad news on a Friday, sparing Obama from having to do so himself?

This story was posted yesterday at almost 7:00 PM at night. It's not a true Friday night release, but it is effectively released for Friday morning.

And this story could have been written any day of the last month or month and half.

It could have been written on a Monday, for example.

Instead, it's buried, to be lost in the standard news-free weekends most Americans prefer. By Monday it will officially be an "old story," and therefore worthy of no further pursuit.



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posted by Ace at 04:14 PM

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