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 American’s paychecks across the board–all 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 taxes–for all income categories–basically 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, it’s an increase that most wouldn’t 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 taxes–across 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 $116–which 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.
Let’s 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
Let’s 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. It’s true that what I’ve 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 year’s budget and in years to come to get under control. But these changes will save the American people billions of dollars. And they’ll help to put in place a government that’s more efficient and effective, that wastes less money on no-bid contracts, that’s cutting bureaucracy and harnessing technology, that’s more fiscally responsible and that better serve the American taxpayer.” ~President Obama
Responsibility. Really?
Don't forget his admission that energy costs will necessarily rise as a result of his policies.
My husband is the only one who has gotten paid so far this year. He grosses $3750 twice a month and his take home pay went down by $8.
add to the to-do list for when we take power:
Constitutional Amendment prohibiting the Federal Government from witholding taxes from payrolls. All Federal taxes must be paid by cash, check or debit by April 15 or other due dates. (when people have to sit down and write a check, they will actually see how out-of-control this is and hopefully do something)
I think you may be correct. They did underwithhold last year when they changed the wthholding tables. This may just be a correction. We knew right away that our take-home pay had increased more than 800/year, so we immediately changed our W-4.
My power bill last summer went from ~$150 to ~$225 in one month. The local pow-co bumped our rates significantly. If Obummer gets Cap and Tax, I’m expecting $350 - $400 utility bills.
Love your screen name, BTW. That movie is a classic!
I've spoken with a few known black Obots over the past couple of days about Barry's lies over televising the HCR debate, and they make excuses. They all are still fervent Obots. One common theme though...I was asked "what color is YOUR America?" So sadly everything seems to be about race. I don't think there is ANYTHING Barry could do to cause these Obots to relent.
Unfortunately this is what we're up against. Apparently race-baiting is alive and well in Barry's "post-racial America". It's worse than ever...
Thanks for posting this.
When the Senate passed their health care bill I decided that, if this becomes law, I would change my withholding from 2 to 9 deductions, pay the lump on April 15, 2011, and put my return in the mail rather than e-file as I have been doing. I was planning to wait and talk to my tax preparer about this move to understand the consequences. Now I may not wait to talk to him.
The more I think about it, the more sense it makes to underpay my withholding, even if I do have to make quarterly supplemental payments (by mail, by check) from now until they confiscate my estate.
The NappyOne
In Barry’s world he’s going to give it back so it isn’t really raising taxes.......right?
That would truly bring about an economical explosion that would make this nation a powerhouse again.
...which is why the librats won’t do it.
Dangerfield is a true legend.
Hear, hear! I am fully on board with this.
The NappyOne
An attractive date for my early retirement.
You might want to speak with your tax person. There are hefty penalties for underpayment of taxes both on the federal and state levels. Been there done that!
Income tax withholding is one for the worst evil ever perpetrated on the people of the United States. It allows the government to take with one hand without many of the masses noticing while they make a spectacle of giving with the other, thus cementing their power base in Washington.
Ask your employer for a new W4 form. Add one or two more exemptions. Problem solved.
0bama still had to sign the bill. Unless he wants to say that Congress put one over on him and tricked him into signing, it’s still his responsibility and his fault.
>> add to the to-do list for when we take power:
Constitutional Amendment prohibiting the Federal Government from witholding taxes from payrolls. All Federal taxes must be paid by cash, check or debit by April 15 or other due dates. (when people have to sit down and write a check, they will actually see how out-of-control this is and hopefully do something) <<
If this were done today or even if the regular worker had to pay taxes quarterly it wouldn’t take long for the pitchforks and torches to come out to play. This would be a bad thing for Washington, but a good thing for the Constitutional Republic.
I designate my own pension withholding numbers. Since it is one of several income streams I cannot rely on the tables to yield the correct amounts.
You’ve got the wrong date. As long as it will be a Constitutional Amendment, the tax payment due date should be set as 5 days before any general election.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.