Skip to comments.Congress Tinkers with Withholding Tax Tables for 2010
Posted on 01/07/2010 8:05:03 AM PST by Paratrooper
Recently, retired military have received e-mail messages notifying them of a withholding tax increase. The email states:
NO ANNUAL COST OF LIVING ADJUSTMENT (COLA) WILL BE ADDED TO MILITARY RETIRED PAY IN 2010.
DUE TO RECENT LEGISLATION YOUR FEDERAL WITHHOLDING TAX HAS CHANGED.
After much investigating and several discussions with the IRS, it appears the Democrats have played a cash-flow trick on working Americans and are taking more out of Americans paychecks across the boardall the while touting the Making Work Pay tax credit. The trick, when looking at the new withholding tax tables for 2010 as compared to post-stimulus 2009, buries an increase in federal withholding taxesfor all income categoriesbasically giving the government an interest-free loan until current year taxes are filed next year. Some would blame the increase in withholding on the Making Work Pay tax credit being spread out over 12 months as compared to 2009, which was only over 9 months, but this would be impossible as some middle class wage categories carry an increase in the withholding tax of over $200 per pay period.
Unlike the middle class wage earners, who are going to see huge amounts taken out of their paychecks, unless they increase their exemptions on their W4 form, its an increase that most wouldnt even notice$10 or $20 in some cases. Here are some of the highlights of the new 2010 withholding tables:
1.) Congress has lowered the threshold to capture more wages that qualify to owe taxesacross the board. For example, in 2009 the withholding tax threshold began at weekly single wage levels of $138. In 2010, that same wage is lowered to $116. In short, instead of the taxable wage starting at $138, it is now down to $116which changes the income threshold and taxes even poorer Americans.
For married couples, the change in the weekly base taxable wage changes from $303 in 2009 down to $264 in 2010. These lower wage thresholds can be seen throughout the new withholding charts for weekly, biweekly, semi-monthly, monthly, quarterly, semiannual, and annual, as well as daily and miscellaneous pay periods.
This across-the-board reduction in the initial wage threshold increases the number of wage earners who would have to pay taxes.
2.) Instead of seven (7) wage categories, there are now nine (9) wage categories. The new structure allows for direct taxation on the middle class with these wages broken out into smaller categories. The direct hit on the middle class withholding taxes can be seen on all of the new tables. Additionally, the IRS could not explain these changes.
Lets look at the actual numbers for one category and compare them from 2009 to 2010: 2009 Biweekly, Single, Payroll Period, after subtracting withholding allowances
Not over $276: $0 in taxes Over $276 $400: 10% payroll tax Over $400 $1,392: $12.40 plus 15% of excess over $400 Over $1,392 $2,559: $161.20 plus 25% of excess over $1,392 Over $2,559 $6,677: $452.95 plus 28% of excess over $2,559 (Notice the large salary range) Over $6,677 $14,423: $1,605.99 plus 33% of excess over $6,677 $14,423: pays $4,162.17 plus 35% of excess over $14,423
Lets look at the new numbers for 2010 Biweekly, Single, Payroll Period, after subtracting withholding allowances
Not over $233: $0 in taxes Over $233 $401: 10% payroll tax Over $401 $1,387: $16.80 plus 15% of excess over $401 Over $1,387 $2,604: $164.70 plus 25% of excess over $1,387 Over $2,604 $3,248: $468.95 plus 27% of excess over $2,604 (Notice the large salary range is gone) Over $3,248 $3,373: $642.83 plus 30% of excess over $3,248 (Notice the substantial increase and 30% tax rate on these wages) Over $3,373 $6,688: $680.33 plus 28% of excess over $3,373 $14,450: pays $4,169.99 plus 35% of excess over $14,450
These patterns of additional withholding can be seen throughout the new charts for the 2010 tax year for single and married persons. It appears that everyone earning a paycheck is affected, not just retired military; social security payments will remain the same.
Why would the Democrats tinker with the withholding taxes and, ultimately, cause more stress on Americans and businesses? Why would the Democrats create more wage categories and deliberately target the middle class with a huge withholding increase and 30% tax rate? Are the Democrats trying to backfill the deficits they created in 2009? Because taxpayers will have overpaid the federal government payroll taxes, will they be eligible to get back this additional withholding money in a tax refund when filing in 2011? Do taxpayers in the hardest-hit wage categories even realize that their paychecks are going to be significantly lower, unless they make the necessary changes?
Maybe there is a good explanation for the increase in the withholding taxes from 2009 through 2010, but I remain skeptical, because inherently, Democrats do not have the capacity to reduce taxes and typically make up the revenue somehow.
Get your calculators out and you do the math. Go here for 2009; start on page 4. Go here for 2010; start on page 39.
And you should remember this and the fact that House and Senate Republicans united against the stimulus bill, which may have been the trigger to all of this. And Obama and Congress should remember this from December 21, 2009:
After years of irresponsibility, we are once again taking responsibility for every dollar we spend the same way families do. Its true that what Ive described today will not be enough to get us out of our fiscal mess by itself. We face a deficit that will take some tough decisions in the next years budget and in years to come to get under control. But these changes will save the American people billions of dollars. And theyll help to put in place a government thats more efficient and effective, that wastes less money on no-bid contracts, thats cutting bureaucracy and harnessing technology, thats more fiscally responsible and that better serve the American taxpayer. ~President Obama
When did or do the Bush tax cuts expire?
Just another example of their terrible greed
The greediest of the greedy, the U.S. Congress
I think Congress allowed them to expire on December 31, 2009.
DUE TO RECENT LEGISLATION YOUR FEDERAL WITHHOLDING TAX HAS CHANGED.And those silly people call the democrats a tax and spend party./sarc
But Barry O'Bama promised he wouldn't raise taxes on those earning under $250,000.
So wouldn’t that explain the change in the withholding tax table? The tax cuts were allowed to sunset.
The Bush tax cuts expire 12/31/10
But according to Madame Speaker Nasty Pelosi, "Lots of things were said on the campaign trail (wink, wink, nudge, nudge)".
There you have it. We just took it out of context! /sarc
Barry didn't raise taxes, the Congress did. Given the sheer magnitude of legislation coming out of Capitol Hill and the fact that no one's ready the legislation, presumably the President as well, this is tinkering with the tax tables as opposed to creating new tax legislation.
Barry's smart in that he chooses his words very carefully. He knows what he said, and technically, he didn't raise taxes, he just had the tables changed to make the FedGuv more money.
Wife just said not 5 minutes ago that her direct deposit is $4 less this week and didn’t know why.
Hope and change at last!................
GHWBush raised existing taxes too but people spun that to mean a violation of No NEW Taxes.
Yeah, I know. He said he was a Christian too.
Taxes will go up for people under $250K. The new threshold will be 150K Count on it.
I’m sick of any and all taxes being hiked. With the Bush tax cuts, I saw an extra $45 a paycheck, which was nice. Since Obama took office, I’m seeing small amounts of money coming out of my paycheck in taxes every other week. I haven’t received my first paycheck for 2010, but I’m sure it’s going to be ugly.
Personally, I have my witholdings hiked to 8, and I’m still getting small checks back. Might be time to bump it up to 10.
Congress lets 50 tax breaks expire
Key tax breaks are mired in limbo, leaving individuals and businesses in a bind. Extensions are expected later, but in these tight times, nothing is certain. By Forbes.com
When members of the U.S. Senate headed home last week, they left the future of 50 individual and business tax breaks in limbo. All of the breaks expire at the end of 2009.
Among them are the research tax credit and an annual alternative minimum tax "patch," which keeps 23 million additional middle-income Americans from being forced into calculating and paying the dreaded AMT. (For 2009, with the patch in place, 4 million upper-middle-income and high-income families will pay the AMT.)
Most of the fading-out 50 can, and probably will, be reauthorized retroactively, creating an inconvenience for some taxpayers but not the same sort of mess as Congress' failure to resolve the future of the estate tax. The estate tax will expire Dec. 31, and Democrats are pledging to resurrect it retroactively, leading to all sorts of potential legal problems, as well as some planning opportunities, for wealthy families.
Among the expiring individual tax breaks:
* The deduction for state and local sales taxes for itemizers (which benefits mainly residents of states that don't impose an income tax).
* The additional $1,000 deduction for real-estate taxes for people who claim the standard deduction.
* The $4,000 deduction for college tuition.
* A $250 deduction for teachers who spend their own money on classroom supplies....
More Here: Forbes.com
They are meeting behind closed doors because they don’t want to get the 61% that oppose his health care reform to get all steamed up watching how ignorantly they intend to spend our money and raise our taxes and overthrow private insurance.
Look at it this way. They wouldn’t be pushing their version of health care reform so hard and fast if they didn’t doubt they will be controlling Congress after the 2010 Election. There is no way you will no longer have to be concerned with Reid or Pelosi once the voter goes into the booth again, and they can choke on their health care bill!
Not a violation, what was meant was No GNU Taxes.
Taxes on us working human Americans continue to rise.
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