Obama Tax Plan to Take Effect April 1

[bandycpa]

I don't know what I'm going to do with $13 per week. Suddenly, I feel economically stimulated.

The sad part is, I've already had clients asking if they should go ahead and reduce their withholdings now so they could implement Obama's tax plan. It appears the "gimme" phase of the package has begun.


Bandy


http://www.foxnews.com/politics/elec...april/100days/

Treasury Directs Employers to Begin Withholding Taxes
Most workers are to see about a $13 per week increase in their take-home pay.

AP

Saturday, February 21, 2009


The notoriously slow Congress passed the $787 billion economic stimulus package in a matter of weeks. President Obama signed it into law less than one month into his presidency.

So, just how soon will Americans start reaping the benefits of tax cuts in it?

By April 1, according to the president.

"Never before in our history has a tax cut taken effect faster or gone to so many hardworking Americans," Obama said Saturday in his weekly radio and Internet address.

He said the Treasury Department has begun directing employers to reduce the amount of taxes withheld from people's paychecks in accordance with the new law, and that in six weeks, a typical family will start taking home at least $65 more every month.

Obama says his signature "Making Work Pay" tax break will affect 95 percent of working families.

The $400 credit for individuals is to be doled out through the rest of the year. Couples are slated to get up to $800. Most workers are to see about a $13 per week increase in their take-home pay. In 2010, the credit would be about $7.70 a week, if it is spread over the entire year.

People who do not earn enough money to owe income taxes are eligible for the credit, an attempt to offset the payroll taxes they pay.

Obama's expensive and ambitious package of federal spending and tax cuts is designed to revive the economy and save or create 3.5 million or more jobs. It will inject a sudden boost of cash into transportation, education, energy and health care, while aiming to help recession victims through tax cuts, extended unemployment benefits and short-term health insurance assistance. It also will add to a rapidly growing national debt.

The president signed the measure into law Tuesday.

In his weekly address, Obama said he was grateful to Congress, governors, mayors and everyday people who supported the measure.

Still, he added: "It is only a first step on the road to economic recovery. And we cannot fail to complete the journey." He said the country also must stem foreclosures, repair the banking system, get credit flowing again and revamp financial industry regulations.

And, even as he promoted the record-breaking spending plan, he called for doing what's necessary to control "exploding" deficits as the economy begins to improve.

Obama is holding a bipartisan "fiscal responsibility summit" at the White House on Monday to talk about ways to control the trillion-dollar budget deficit. The next day, he is to address a joint session of Congress, a speech expected to focus heavily on the economy. On Thursday, Obama will send a budget request to Congress "that's sober in its assessments, honest in its accounting, and lays out in detail my strategy for investing in what we need, cutting what we don't and restoring fiscal discipline."

Republicans are certain to hold him to that.

In the GOP's weekly address, Rep. Dave Camp of Michigan, the top Republican on the House Ways and Means Committee, said his party wants to work with Obama to solve the country's economic problems "in a responsible way that does not burden our children and grandchildren with a mountain of debt."

"We can't borrow and spend our way back to prosperity," Camp said. "If he is serious about dealing with the tough issues and getting spending under control, his budget will show it."

[Dozer523]

Bandycpa, you are dead on. It is so small at the individual level no one will notice it. That might be the best thing about it because EVERY body gets it. And there are lots of EVERYbodys.
In an earlier thread, it was discussed what would happen if the tax cut was big, significant? noticable, at least. Say -- another stimuleous dump of a few thousand dollars. I, for one, (and I don't think I'd be alone) would throw mine at my exsisting bills. Helps me! but not my neighbor who loses his job because I'm not buying what he makes.
$13 bucks a week is good for a couple of cups of regular coffee (I'm not stimulating the economy to the tune of a double-shot, soy, skinny, extra whip, hold the chocklet syrup Mocha Frapachino -- I HAVE to draw the line somewhere!); a happy meal; and a basic carwash. So, maybe, if we all hit Starbucks, Mickey Dee's and the Chevron, we can (at least) keep the High Schoolers employed. Then their parents won't be so worried.
Or (Maybe) I'll start paying my kids allowance again. (OMG! I laid off my kids! I can re-hire them!)
We can beat this thing on $13 per day X 160,000,000. *

*I made that number up, sorry. But there have to be LOTs of taxpayers. A number NMAP, if you please.

[echoes]

Originally Posted by bandycpa

[I]I "Never before in our history has a tax cut taken effect faster or gone to so many hardworking Americans," Obama said Saturday in his weekly radio and Internet address.

Think I am going to be sick!

Honestly, if Americans buy in to this load of crap, then they get what they deserve, IMHO.

Here is a thought...If the current administration thinks American citizens will swollow this sh*t, then I am curious what else "they" have in store for "us?"

Holly

[bandycpa]

Originally Posted by Dozer523

It is so small at the individual level no one will notice it. That might be the best thing about it because EVERY body gets it.

All this hype that the Obama Administration has put into this has created an expectation of real assistance through this tax plan. Like you said, if it was significant, we could do things with the so-called stimulus that would hopefully allow people to get back on their economic feet.

But $13 per week per worker?

Like Echoes said, all that does is allow Obama to say "I did something, and I did it faster than any other President in history". Kind of reminds me of the Jeff Foxworthy routine where he describes the difference in men and women doing things around the house. The husband cleans out the ashtray, and then crows about it to his wife, who is busy resealing the driveway. All Obama has done is empty an ashtray, and I'm not sure that we even smoke!

Bandy

[echoes]

Originally Posted by bandycpa

All Obama has done is empty an ashtray, and I'm not sure that we even smoke!

Bandy

Bandy,

Very well said, IMHO!

just my .02

Holly

[Saoirse]

If I remember correctly, when Ronald Reagan became president our economy was much worse than it is now. Didn't he do the complete opposite? He proposed and thankfully, Congress passed sharp cuts in the tax rate, it stimulated the economy with growth and employment and federal revenues increased.
I have often heard, especially during the last days of the campaign and after Barry was elected, a comparison of him to Pres. Reagan not just Abraham Lincoln. But I hardly see the comparison and as for the April 1st date, I find it a bit ironic...because this really is just a joke (IMO)

[Dozer523]

Originally Posted by bandycpa

All this hype that the Obama Administration has put into this has created an expectation of real assistance through this tax plan. Like you said, if it was significant, we could do things with the so-called stimulus that would hopefully allow people to get back on their economic feet.

Like what?
My execution of "the plan" puts three kids back on the payroll. !)

[Dozer523]

Originally Posted by Saoirse

If I remember correctly, when Ronald Reagan became president our economy was much worse than it is now. Didn't he do the complete opposite? He proposed and thankfully, Congress passed sharp cuts in the tax rate, it stimulated the economy with growth and employment and federal revenues increased.
I have often heard, especially during the last days of the campaign and after Barry was elected, a comparison of him to Pres. Reagan not just Abraham Lincoln. But I hardly see the comparison and as for the April 1st date, I find it a bit ironic...because this really is just a joke (IMO)

I don't think it was as bad in the same ways. I doubt it is fair to compare -- I defer to NMAP. But, do you remember what happened to the money supply and Interest Rates? Mortgages were at 14% and people were racing to get into them, because there seemed to be no end in sight. I just refi'd (there is too money out there -- if your credit report walks on water) to 4.47. That ought to be unbelievable. I have three times the mortgage for nearly tthe same payment. It did work but tough medicine. The comparision to President Reagan? I think they are comparing their hair.

[bandycpa]

Originally Posted by Dozer523

Like what?

For starters, and I think you had alluded to it earlier, paying off bills and other debt. To me, the biggest crunch we have is not so much the mortgage problem, but the unsecured credit problem that a lot of us face. Credit cards with rates upwards of 20%, coupled with a persons inability to hold off until they can actually afford the purchase, have created a situation where people either pay off perpetual interest. Worse yet, people simply stop paying on the cards altogether, and screw up their credit for a very long time.

Second, if we're giving out stimulus money, let's use it to pay off people's mortgages. Mortgages take up approximately 30% of a person's take home pay per month. Imagine what we could do with that 30% if it was freed up from a monthly mortgage obligation.

Third, I'd like to see those monies put away into people's retirement funds. Granted, that doesn't stimulate the economy, but it would set aside money for retirement that people are not setting aside now on their own. Over 30 years, a retiree could have a substantial sum of money set aside that started with a "stimulus-given" nest egg that they weren't even aware of (as far as coming out of their own pocket).

Fourth, and this one hits close to home, we could use it in some form or fashion to help make health insurance / medical costs more affordable. I don't know how we could do it, but it seems that there should be some way to keep costs (and, on the flip side, billings) down so that health care could be more affordable.

Ultimately, though, I think the stimulus / tax package isn't necessary at all. The four things I listed above are nice in a theoretical bubble, but three of the four above are dependent on a change in human nature. The stimulus / tax package will not change human nature.

In the first scenario, if you don't buy things until you can afford them, you don't have a credit card bill that piles up unearthly amounts of interest. If the government pays off my credit card bill, am I apt to cut up the card? Or would I just go spend more credit on things I don't need.

In the second case, I decided when I bought the house that I could afford "x" amount. What if I decided that a smaller house would do just as well? I had the control to determine how much I would be paying a month for my mortgage, whether it took up 10%, 20% or 30% of my monthly check, when I decided I wanted a $100,000 house instead of a $75,000 one.

In the third case (and in conjunction with the other two above scenarios), I have to discipline myself to contribute to (and manage) my own retirement fund. If the government gives me retirement money, and I want that big screen tv, will I pull the money out of that retirement account so I can watch NCIS in HD?

In my opinion, even with a $100,000 stimulus payment per person, we would still be in deep water within 5 years of the payment if human nature didn't change to take advantage of the fresh start we would gain from such a program. $13? I don't think it'll change any behavior at all.

Did I just argue for and against the stimulus in the same post?


Bandy

13 bucks... heck that won't even buy me a bottle of good Irish Whisky so I can remain catatonic.

Originally Posted by Dozer523

Like what?
My execution of "the plan" puts three kids back on the payroll. !)

Mine is to look at 'retiring' in Belize and just walking away. For single white taxpayers like me, there is no real stimulus. House and car long paid for.
kids grown and on their own. Neither needs help from me, thank heavens.
I would be 3 hrs from mom on a plane.. I am about that now.

All I see is my taxes, in the long run going up. I am tired of feeling like a yo-yo on a string, at the whim of politicians..
a.m.

[Gypsy]

Originally Posted by bandycpa

Did I just argue for and against the stimulus in the same post?


Bandy

Are you a Gemini?


Wow...a whole $13.00. Yeah, that'll help me to stimulate the economy.

Not.

[bandycpa]

Originally Posted by Gypsy

Are you a Gemini?

Gypsy,

You hit it right on the head. How'd you know?

Bandy

[Sten]

If you don't want the 13 bucks I will be glad to take it.

[Monsoon65]

A whole $13. I think I'll go to the movies. By myself.