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Sin of Omission by Geithner in Chest-Thumping over Tax Cut Deal

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Donnachaidh Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-17-11 04:32 PM
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Sin of Omission by Geithner in Chest-Thumping over Tax Cut Deal
http://news.firedoglake.com/2011/01/15/sin-of-omission-by-geithner-in-chest-thumping-over-tax-cut-deal/

Tim Geithner led an Administration effort yesterday to publicize in glowing terms the tax cut deal passed by Congress and signed by the President during the lame duck session in December. Concurrently, they sent out a fact sheet with some similar statistics that Geithner described in a press briefing. He claims that 159 million workers will benefit from the payroll tax cut, and theres no reason to doubt him on that point. But the analysis suffers from a major sin of omission.

Geithner said that the payroll tax cut, totaling about $110 billion according to new estimates, will lead to an increase in take-home pay for the average worker by about $700 a year, and for the average working family about $1,000 a year. Its important for him to use those numbers, because they are greater than the $400 per individual, $800 per family Making Work Pay tax cut which this payroll tax cut essentially replaces for 2011. The difference comes in how those taxes get calculated and where they phase out.

Making Work Pay was a flat $400 for every worker, but the benefit phased out for workers making over roughly $95,000 a year. That meant it was targeted directly to people who would spend it and offered a pretty nice benefit. By contrast, the payroll tax cut applies to every worker in America, as Geithner says. Bill Gates will get a payroll tax cut. Alex Rodriguez will get a payroll tax cut. Paris Hilton will get a payroll tax cut. Because the payroll tax itself caps out currently at $106,800, the tax cut for Gates, Rodriguez, Hilton and anyone else making that number is $2,136. But thats $2,136 more than they got under Making Work Pay. Ill leave it toy you to determine whether thats something they need, and something which will work to stimulate the economy.

By contrast, at the low end of the scale, the benefit from the payroll tax cut ends up worse than the benefit from Making Work Pay. Making Work Pay was a flat benefit of $400; with the payroll tax cut its a percentage of income. So any individual making under $20,000 a year or family making under $40,000 a year will see less of a benefit under the payroll tax cut. That comes out to roughly 50 million workers, or close to 1 in 3, using Geithners numbers.

More at the link --
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ladjf Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-17-11 04:50 PM
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1. The Tax Cut Deal was a disaster and a sellout. nt
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mmonk Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-17-11 04:56 PM
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2. +1
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Statistical Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-17-11 05:09 PM
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3. Does Paris Hilton have a job?
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hfojvt Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-17-11 05:47 PM
Response to Reply #3
4. according to Wiki
Edited on Mon Jan-17-11 05:48 PM by hfojvt
"In February 2010, Hilton participated in an advertising campaign for the launch of the Brazilian beer Devassa Bem Loura ..."

Although I doubt if she paid FICA taxes on whatever income she got from that. She also did voice work for the movie "The Dog who saved Christmas vacation." Again, if she is paid in residuals then I don't know if that is taxed the same as wage income.

The point still basically stands though in that there are many rich people getting decent sized checks from the stupid FICA tax cut, as I noted before the damn thing passed http://journals.democraticunderground.com/hfojvt/135
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xchrom Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-17-11 06:27 PM
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5. Recommend
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