Obama's stimulus plan??

[David1980]

http://seattletimes.nwsource.com/html/politics/2008593863_stimulus06.html

Under Obama's plan, the key tax provision would be $500-per-individual or $1,000-per-couple rebates for most taxpayers. Instead of mailed checks — the rebate method that the Bush administration used in a failed bid to spark the economy last year — the amount would be distributed by withholding less from paychecks over a period of months.

[veritas]

Excellent!

http://seattletimes.nwsource.com/htm...timulus06.html

That was Ronald Reagan's method of choice.

[taxea]

Nobody is getting anything until Congress passes whatever bill/bills necessary and the Pres. has signed on the dotted line.
No sense in speculating...no sense in guessing...

For the clients who ask: my response is "there is much talk and speculation but nothing has been decided. When it becomes law we will know, until then, we won't."taxea

But for those of you who need to hear it...the latest I heard is that Obama wants to lower the withholding by $500. per year per worker. I say....big deal! that isn't even $50 per month...what the heck is that going to pay for? Surely not going to help us peons raise the economy....!taxea

[David1980]

$50 per month might not seem like much but a small change could cause a greater economic impact. At any rate, I would rather they make a series of small changes to get things on track instead of making a big change and overdoing the thing causing even more problems.

[WhiteOleander]

Adjusting the withholding tables is much more econominal. Sending out those stimulus checks cost a heck of alot of money. And now the so called "experts" say the money didn't help the economy at all.

[Bees Knees]

If my $1,200 check last summer didn't help the economy, why will withholding $1,000 less out of my paycheck do any better? I didn't have to pay tax on the $1,200. That was free money to me. All the $1,000 is going to do is cause me to underpay my taxes by $1,000.

Just goes to show how ignorant politicians and the public are as to how taxes work.

[FEDUKE404]

In a place far away....

The unemployed were glad to have a job, no matter how hard, and no matter what was paid.

Things have changed.

The unemployed now will not work those type of jobs. There are many jobs available now, not the best, but the(re) are jobs and they refuse to take them. They have lived on welfare for so long, and for so many generations, that they expect it now.

Jiggers -

At the risk of getting too many "non-tax" issues presented here, I agree with you completely.

Things have changed, and merely "having a job" often loses out to simply waiting for some more money from the government.

The bread lines of the Great Depression have now been replaced by the Wal-Mart stampedes.

A sad commentary on things.........

FE

[Nashville]

Gush of Money

Adjusting the withholding tables is much more econominal. Sending out those stimulus checks cost a heck of alot of money. And now the so called "experts" say the money didn't help the economy at all.

Actually last year's stimulus was the first in a long list of government actions to stop the recession from ocurring. And they all failed. Stimulus didn't stop it. $900,000,000,000 bailout packages didn't stop it. Cutting the fed prime rate to 0% didn't even stop it. These are the 2008 govt solutions designed to buy their way out of superficially propping up the housing market with ridiculous lending practices during a period where the actual wages of workers were going DOWN instead of up. Govt just went too long without a reality check.

There is a feeling among many govt people and economists that only a "gush" of money will help, left in the hands of consumers. $50 a month just gets absorbed into conventional spending habits, and if it is a withholding adjustment without a real tax decrease, then the only thing coming out of this is a lower tax refund at the end of the year. Compare this to a sudden infusion of $1000-$1500, where consumers can buy a used car, appliances, or other big-ticket items, and the economy gets a real boost.

I don't think it's any accident that the withholding tables (as those given in Cir. E) are designed to over-withhold. Firstly, it takes away a government collection problem by converting tax deficits into refunds for an overwhelming majority of people. Secondly, it does create this "gush" of money that people can use to go out and really buy something instead catching up on last month's electric bill.

Or so they say.

[Jesse]

...... $50 a month just gets absorbed into conventional spending habits, and if it is a withholding adjustment without a real tax decrease, then the only thing coming out of this is a lower tax refund at the end of the year. .....

This is what seems to confuse so many taxpayers. So many people do not receive the same amount of pay each payperiod and they don't pay attention to the w/holding. They know approx what they think their refund will be. Then they hear they are going to get this extra stimulus pay and spend it before they get it. When their return is completed and you explain that yes you did receive this extra money over the year and not in one lump sum they just don't get it - or don't want to get!