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This puts the lie to Obama‘s promise that, under his plan cooked up with Mitch McConnell “no American family’s taxes will go up on January first:”
The Making Work Pay credit gives workers up to $400, paid out at 8 percent of income, meaning that anybody making at least $5,000 gets the full amount — and gets as much as anybody else. Its replacement knocks two percentage points off the payroll tax cut, meaning a worker would need to make $20,000 to get a $400 break. Of the nation’s roughly 150 million workers, around 50 million make less than $20,000 and will see at least some increase as a result.
Additionally, roughly a quarter of 20 million state and local workers pay no payroll tax, because they have a separate pension system. Some of those workers with children will benefit from the extension of other tax credits, but overall will have less money in their pocket.
If one of every three taxpayers is going to see a smaller paycheck because of this deal, then I think the deal is dead. Democrats can’t possibly support raising taxes on the lowest-paid taxpayers and public servants.
Can they?
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Odd that Paris Hilton and Kim Kardashian get a tax break under Barack Obama’s wonderful plan, but the barista and the day care worker and the retired cop will pay more.
How did that happen?
i am one of those for whom taxes will go up.
dammitalltohell
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Me too.
Who knew there were fifty million workers earning less than twenty thousand a year? Not Team Obama, clearly.
My gross is only $26K so I don’t find it hard to see 20M making under $20K.
Yes They Can! (unless stopped by the House)
Another aspect to all this is so obvious: If you pay 0 in taxes (or get it all back in a refund), then a 3-5% increase is still zero. I don’t have the tax tables in front of me, but…
At what income level (claim self as dependent, take std deduction, no itemizing) does one stop getting 100% refunded?
How does that income level change with an increased number of dependents?
The SSI tax “holiday” is another matter.
I expect somebody somewhere has already done this math.
One in Three.
One in Three.
One in Three.
And the very folks whose spending drives the economy.
$400? These people floss thier teeth with that kind of money. They don’t care.
Less than we’d think.
“The top 5% of Americans by income are responsible for 37% of all consumer spending– about the same as the entire bottom 80% by income (39.5%).”
http://www.zerohedge.com/article/guest-post-key-understanding-recession-and-recovery-wealth-pyramid
The economy has already been shifted toward pate, champagne, yacht racing and adult services.
Raising taxes on January first is the very thing Obama said he avoided by making this deal. Now that we see that’s not true for one-third of American workers, it’s time to kill the deal.
Someone on Team Obama didn’t do the math right.
Or else someone just doesn’t care about poor workers.
A 2.7% increase in taxes is a LOT. Especially when the president keeps telling us that no one’s taxes will go up under his deal with Mitch.
Is he lying?
Or is he misinformed?
I’m pretty sure Ryan Grim did the math in his linked article, which I didn’t copy all of from PuffHo. Take a look at it and let me know if that answers your questions.
When one-third of workers’ paychecks go down in January, you’re going to hear some righteous indignation throughout the land.
Of course, under a GOP House, it’s less likely to be fixed. Funny, that.
All these ‘hurry up’ Shock-Doctrine crisis legislations are crazy with unintended consequences. It didn’t start with Hank Paulson, but his three-page TARP bill with attendant doom-and-gloom showed the way. Larry Summers is making the same kind of noises about this billionaires’ bailout.
Since so many health insurance costs will also be rising on 1 January, how much ya wanna bet the decrease in take home pay gets blamed solely on “Obamacare costs”
Well, there is irrefutable proof in that article that they think people are incomprehensibly stupid and can be lied to at will. Check out this stunningly prevaricating statement by Summers:
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(from the Huffpo Ryan Grim article)
Summers, asked by reporters about the effect on poorer workers, conceded that they would suffer slightly under the payroll tax cut as compared to Making Work Pay, but said the other tax credit extensions would balance it out or make the family better off. And if GDP goes up by one percent, he said, “that’s $2,000 for the average family.”
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Gosh, isn’t that just swell? I am so excited now! Why didn’t someone explain to us earlier that every single family gets a direct cut in each percent of growth in the GDP? Sounds a little Commie to me, but as long as I get my cut, I’m ok with it.
Obamanomics = Reaganomics, without the genial senility
Larry Summers thinks we’re all stupid. Just ask him.
Girls especially.
Just sent a letter to my two Democratic senators asking why they are willing to raise taxes on American earning less than $20,000. Won’t do anything, but maybe one of their staffers will realize this will be the framing after the vote.
Teddy, I completely agree that every dollar counts for the average American. I just don’t think they care.
We’re gonna have to make them care. Raise a stink about this.