Making Work Pay Credit not likely to be extended
Filed under: Tax, Recession, Tax - Credit
Congress' effort to stimulate the economy included pushing through a series of tax breaks in 2009. The centerpiece of the legislation was the Making Work Pay Credit, which was intended to provide tax relief for working and middle class families. It may not last beyond this year.The idea was to allow more taxpayers to have cash in their pocket during the year, as opposed to at tax time, by adjusting the amount of earned income withholding.
Under the current legislation, the maximum allowable credit is $400 for individuals and $800 for married taxpayers filing joint returns. The credit is figured at a rate of 6.2% of earned income. It phases out for individual taxpayers with modified adjusted gross income over $75,000 -- or $150,000 for married couples filing jointly; the phase out is at 2%, which means taxpayers who earn more than those limits still qualify for the credit, but will not receive the full amount. The credit is also refundable, so if you are due a credit that's larger than your tax liability, you qualify for a refund.
That's the good news. The bad news is that those taxpayers who benefited from the Making Work Pay Credit in 2009 and 2010 tax years should enjoy the extra dollars now, because the credit is likely not being extended to 2011 or beyond. As Congress battles it out over extending the Bush tax cuts, they also have to consider the cost of extending other tax credits. The Making Work Pay Credit is expected to cost an additional $600 billion over 10 years. The argument against extending the credit is that it's simply too expensive. Those in favor of extending the credit point out that the primary audience, the working middle class, has been the hardest hit during the recession.
It's not just a question of economics; it also boils down to political capital. The push to extend the so-called "Bush tax cuts" has gathered momentum over the past few months, while the notion of extending the "Obama tax cuts" has barely garnered any attention at all. The only thing that is clear is, semantics and politics aside, taxes are likely edging up next year.
Cerraeh Laykin for AOL
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Reader Comments (Page 1 of 1)
9-27-2010 @ 3:24PM
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9-27-2010 @ 4:08PM
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9-28-2010 @ 10:15AM
Katy said...
I am not surprised to see that the tax cuts are being debated. Some of them are pretty expensive. Most people though can not differ between the bailout and the stimulus. They think they are both the same. The stimulus was done by Bush and did very little except put some money in pockets but not much. The bailout which is already mostly paid back and made the gov millions in interest actually worked. But this is all moot compared to the slow recovery of the economy. To help yourself recover faster give this site a try Http://www.savecreatively.com free samples and stuff.
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9-28-2010 @ 2:14PM
pd39 said...
The recent passage of $30 billon for small business assistance begs the question: "We've had small business assistance for generations. Why is it necessary now to borrow $30 billion, of which only a few million will ever end up in the hands of small businesses?"
This administration has taken more money for more set-asides (slush funds) than all the previous administrations since the founding of the country. Earlier this year there was a big stink raised about an LA City council member who used $770,000 to renovate his personal office "because he didn't like" the light color of the wood. It came out that, above and beyond his normal budget, he was allowed $1million per year out of the general tax fund for "special" projects, and if he didn't use the money it was carried over to the next year, ad infinitum. And he gets another $1 million next year!
This is the exact same thing the current administration is doing to the American people. Every time they pass a bill, it costs us a ton of money, and we have yet to see anything to our benefit from it. If that money is not spent, it also will carry over and added to. I'd be willing to bet that the $34 million that Bush authorized for aid to Bam, Iran after the 2002 earthquake is STILL earmarked somewhere in this administrations slush-fund budgets.
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9-28-2010 @ 9:23PM
blindsquirl said...
"popular " tax credit may be ending".......what popular tax credit are you referring to??
Possibly the tax credit for the BILLIONAIRES who support your work?
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