Stimulus Bill Tax question?

[Jack_DeLeon]

I remember hearing how Obama had wanted instead of a "stimulus check" ala Bush, for taxpayers instead to get a less taxes taken out of thier paychecks. The theory being that if people had an extra 20 or 50 dollars a paycheck they would spend it on things.

So is any of this in the Stimulus bills being proposed or not?

If so is it something like an actual tax cut for middleclass and lower tax payers? Or was it more like just less money being withheld?

[elleng]

1. I don't know the answer to your question,

but isn't 'an actual tax cut . . .' the same as 'less money being withheld?'

[Thothmes]

2. Less money withheld does not equate to lower taxes.

What counts is the the taxes due at end of the year. If less money is witheld from your check this year than last year, but your taxes remain the same, you (A) get less of a refund, or (B) you stroke a check to the IRS to make up the difference. In either case you are paying the same tax. For it to be a tax cut, the taxes at the end of the year have to go down. JMO

[elleng]

3. Correct,

Withholding should, if done well, reflect approximately the amount owed, and should reflect lower tax if that's the case.

[KharmaTrain]

4. He Was Also Refering To The 2010 Tax Sunset...

The tax cut that was passed in 2001 was set to expire in 2010...returning tax rates to the higher levels for many people. This would have really hit hard those who enjoyed "bracket creep" in the late 90's and early 00's. President Obama proposed leaving the 2001 rates in place for those earning less than 150k a year and letting the old rates come back for those above. In essence, a continued tax break for the middle class. Inversely, the GOOP tried to use the over 150k increase as being across the board. Typical GOOP lying.

I don't think there's a consensus yet on how the additional stimulus plans will be enacted. Offering it on payroll is well and good, but that doesn't help the unemployed or on fixed incomes. Do you issue checks again? And how much? Or are tax credits the way to go? I see a combination coming up...and also pushing through tax reform later this year. Right now the most important thing is to stop the bleeding...get the credit situation under control and keep people from defaulting...then we can figure out how to start putting money back into both their hands and the economy.