Obama’s Attempt to Redefine The Term “Tax Cut”

Here is a list of tax cuts that were passed under the Bush administration. Bush attempted, on multiple occasions, to make these tax cuts permanent. Congress passed these tax cuts, but only as a temporary measure they will all expire by 2011.

Now we have Obama running around saying that he’s going to cut taxes for 95% of Americans. The problem here is that 95% of Americans don’t pay taxes. The second problem is all of his proposed spending.

Obama claims that he in going to cut the deficit by allowing the Bush tax cuts to expire. Lets take a look at what that entails…

http://www.heritage.org/Research/Taxes/wm486.cfm

Note: Some of the following tax cuts were extended until 2009, but ALL will end by 2011.

- Child Credit: This credit will shrink from $1,000 to $700 per child on January 1, 2005.

- The 10 Percent Bracket: The upper income level for this bracket will decrease by $1,000 per filer on January 1, 2005.

- The 15 Percent Bracket for Joint Filers: On January 1, 2005, the upper limit of this bracket will shrink from 200 to 180 percent of the upper limit of the 15 percent bracket for single filers, creating a marriage penalty.

- Standard Deduction for Joint Filers: On January 1, 2005, this will shrink from 200 to 174 percent of the standard deduction for single filers, creating a marriage penalty.

- Alternative Minimum Tax: Exemptions will decrease by $6,500 per filer on January 1, 2005.

- Bonus Depreciation: This provision, which changes depreciation schedules for businesses in a way that encourages investment, will expire on January 1, 2005.

- Small Business Expensing: On January 1, 2006, the maximum amount that a business may deduct will fall from $100,000 to $25,000, which will not be indexed to inflation.

- Capital Gains: Rates will rise to 10 or 20 percent, depending upon income, on January 1, 2009.

- Dividends: Rates will rise to match standard income tax rates on January 1, 2009.

- Child Credit: This credit will shrink from $700 to $500 per child on January 1, 2011.

- The Income Tax: Rates will increase between 3 and 4.5 percentage points in each bracket on January 1, 2011.

Here is the real kicker. Remember how Obama said that people are going to see an increase in the amount they see each paycheck? Well that doesn’t work quite the way you thought it might. His measure is not a tax cut. It is a tax credit. The tax rate (the tax owed per amount earned) is NOT going down. As a matter of fact tax rates will go up in each bracket; back to where they were before the Bush tax cuts were instated. Under Obama's plan employers are simply going to withhold less. Check it out, here is the link to the IRS website.

http://www.irs.gov/newsroom/article/0,,id=204521,00.html

Available for tax years 2009 and 2010, the Making Work Pay credit is 6.2 percent of a taxpayer’s earned income with a maximum credit of $800 for a married couple filing a joint return and $400 for other taxpayers, but it is phased out for higher income taxpayers. Most workers will qualify for the maximum credit. Because the credit is refundable (people can get it even if they owe no tax), most low-income workers will also qualify for the full credit.

Though all eligible taxpayers will need to claim the credit when they file their 2009 income tax return next year, the benefit will generally be spread out over the paychecks they receive beginning this spring and continue until the end of the year.

A Tax Credit, I thought Obama said, "tax cut"? So in other words Obama’s plan amounts to you claiming more dependants on your 2009 W-4 form. So at the end of the fiscal year, when you have to file your taxes, that extra $10 a week is counted as INCOME. This means that you will be taxed on it when you file your 2009 taxes.

Don't forget that the Bush tax cuts are going to expire in 2011 causing a tax increase for EVERYONE (that pays taxes). Of course the terminology the Obama Administration likes to use is, "roll back tax cuts".

Some tax cuts huh?