Wednesday, February 10, 2010

So Much for our Payroll Stimulus

The government giveth, and the government take away.

As I watched Vice President Biden bragging on Larry King Live tonight, I started getting furious! Biden bragged and gave specific examples and even approximate amounts of how much money people were saving from the payroll stimulus package that was implemented last April 1. He even claimed to know what us common folk have been spending our new found money on; things like gasoline and food, and how it's helped our economy, blah blah blah. All the while he is grinning like a opossum and looking and sounding so proud.

Well my friends, that is no longer true what he said and the amounts he gave. Either he is ignorant and does not know that our federal with holding tax rates went back up as of the first of this year or he is deliberately not saying it to make it sound like our taxes did not get raised.

Think of it like this: a store has a certain retail price on an item and wants to trick you in to believing that it is on sale now. But what they really did was raise the price and then the so-called sale price is actually what the original price was before the sale. That's a pretty sneaky trick isn't it? That of course, would be something that store would not want you to know.

And the fact that payroll taxes have gone up already is also something I believe our government does not want you to know. It's true the rate did not go up to the higher amount it was before the payroll stimulus last April, but it did go up. How do I know? I know, because payroll is one of my job duties. At the end of this blog post, a copy of the tax chart (for weekly payroll) effective April 1, 2009, when we all started clearing a little dab more on our pay checks is shown, as well as the new tax chart for 2010 for your comparison. Notice there are two sets of with holding rates--one for single people and one for married people.

You may also notice how much more (almost double) that a single employee must pay in federal taxes as compared to the married employee. Does that sound fair to you?

I wonder, was it another broken promise by the Obama administration, when they said that our taxes would not got up? If I remember correctly, first Obama said you would pay more only if you earned $250,000 a year or more, and then several times that figure changed in various speeches, depending on who was speaking and at what event and time. We all bought it, hook, line and sinker though. Surprise! And Happy f'ing New Year. What do you bet that our taxes will go up again in 2011 and be right back at the same rate, if not higher? And what will happen in 2012? I predict that the federal with holding tax will go up more and more each year!

Please forgive me for if I come across sounding like Sarah Palin with her snarky little remarks. Believe me, that is not my intention. I do however want the truth to be known that yes our Federal With holding taxes went down last April 1st. But guess what they don't want you to know? Those taxes were raised as of January 2010. That is a tax increase.

It was a great day to do payroll, when I wrote "Payroll Stimulus kicks in! You get a raise!" last April 6th. And that blog post went on to receive more views from google search than any of my other posts. I hope just as many readers will find this in their search engines and learn the truth.

I'm sure we can all understand a possible need for a small tax increase, but Biden had no right to go on international television and gloat and brag about something that is no longer true.

Here is the With holding table as of April 1, 2009, when the taxes went down. Under neath it is the NEW With holding table as of January 1, 2010, so you can compare for your self. The scans are small, but if you click them, they will become full screen.

If you are paid weekly, you can also look closely at your pay stub and these charts and see if the correct amount of federal tax is being with held. You can find additional tables (such as monthly, semi-monthly, etc) at www.irs.gov. However, you will not find the previous lower rates for comparison on the that site.






Stumble Upon Toolbar

9 comments:

GregoryJ said...

I don't have to worry about payroll tax.

I'm not on a payroll, thanks to the greedy gambling bastards on wall street who are spending their million dollar bonuses while all the people they screwed are fighting the wolf at the door.

Larry Ohio said...

Taxes may also go up when the Bush tax cuts finally expire. I just wish our Congress wasn't in gridlock. Maybe then Obama could actually do something to fix this Depression the last administration put us in.

Allen said...

John, thanks for the info on this. I had no clue it went up so much. That is a big jump, just for me. How do they expect us to live if they keep taxing us like this?

Larry, the last administration was not the only ones at fault. This mess started back in the 80's. Its the fault of both parties. Not just one.

Jim said...

In this age of big bank bailouts and the corruption on Wall Street, income taxes should be abolished altogether.

Sean said...

Correct me if I am wrong -- but this just changes the amount of pay that is withheld, not your actual tax rate. Meaning that unless there is a correspending increase in the federal income tax rates (which you don't mention), the extra money that is withheld will just be given back to you come refund time. So while this means your paycheck will be slightly smaller each week, it isn't actually a tax increase since you are just loaning that money to the government until it is time to actually calculate how much taxes you owe on April 15. Or did I miss something?

John said...

Thank you all for comments. I must work a lot of hours now through Monday, so will hopefully get back to comment reply next week.

@Sean, to me anyway, it's like saying, "that depends on what the meaning of 'is' is." If the amount of tax with held goes up, then yes I would still consider that your tax rate has going up.

I tried to keep this simple, but I did write it faster than I would have liked. If I am wrong about anything, I'm happy to be corrected on it.

And not everyone will get back that difference in the new amount of tax with held. The only way you will get any federal tax refund is if you pay too much in, or if you qualify for Earned Income Credit, or have a lot of deductions.

Sean said...

Right, but if you DON'T pay enough in to get a refund (meaning you owe money on April 15th), then the increase in tax withholding means you would owe less money come April (because more has been withheld).

Withholding is not a tax. It is an advance payment on the taxes that are due at the end of the year. If the advance payment goes up, but the tax rate does not, there has been no tax increase. You do not pay any more money than you would have paid before. You just have to pay the same amount of money sooner.

It is like your credit card bill increasing your minimum payment due. It doesn't change how much you owe or the interest rate you are being charged, you just have to pay more sooner (on the same amount you already owe).

Still kinda sucks because your paychecks will be a little smaller, but like I said you will get that money back at the end of the year (or have to pay less if you underwithhold). It is not a tax increase.

John said...

@Sean, I will edit the post to reflect a more accurate picture...like saying this is "like" a tax increase. Anything else...just let me know, but please provide some reference source. I don't claim to be a CPA. Are you a CPA? I was simply trying to explain it how I see it and how it affects the employees. And I provided the with holding tables to show the NEW amount of with holding.

Why would the with holding (advance payment for taxes due at end of year) go up? They would only go up if that is the amount you required to pay on your income taxes.

You talked about the "tax rate," in both posts, maybe you could clarify exactly what you think that "rate" is. There cannot be one simple "rate" when clearly these with holding tables show a smaller amount of with holding taxes for the married people and a much larger amount for single people. And please provide your sources.

I showed these with holding table charts to show how the amount with held has gone up and not stayed the same as VP Biden would have us believe.

The with holding table represents the NEW amount of tax to be with held that will, like you say, be due at Tax Time. The federal government surely would not with hold MORE tax (toward the amount due at tax time) per pay period than is due for the year, right?

The govt. does not want people to pay in more money than will be due on April 15th and in the income tax return instructions, it even says they can penalize you for doing that. That is why you complete the W-4 upon being hired--so that the CORRECT amount of tax is with held. If the employee fills that form out correctly, he should owe very little or no income tax on the income tax return.

"Withholding is not a tax. It is an advance payment on the taxes that are due at the end of the year." That sounds like a contradictory statement to me!

I still say if you are now having more tax with held from your pay check, it s because that reflects what will be owed on your income tax return. So that means your taxes have gone up. The confusion comes with the word "rate."

Thanks for your comments.

libhom said...

John: I was about to make the same point Sean was, but he did a better job of it than I would have done.

Blog Widget by LinkWithin

Flag Counter (Since July 6, 2009)

free counters