Giving with one hand, taking with the other. (Emphasis added)
WASHINGTON (AP) - More than 15 million taxpayers could unexpectedly owe taxes when they file their federal returns next spring because the government was too generous with their new Making Work Pay tax credit.How could they not figure out there would be a problem with spreading it out over the year instead of just sending out a lump-sum check so people would not get more than intended and then have to pay it back (or, Heaven forbid, cut spending and reduce taxes in the first place)? Prime consideration should have been given to the fact that, in order to survive, most families need both spouses working or each working multiple jobs. Perhaps they were dazed and confused by the growing unemployment rate. This change in withholding started in April but they wait until November - just before Christmas and with only weeks left in the year - to let people know they will probably need to pay it back when they file their 2009 tax returns and possibly face penalties (but those may be waived!), all because of DC's own ineptitude?
Taxpayers are at risk if they have more than one job, are married and both spouses work, or receive Social Security benefits while also earning taxable wages, according to a report Monday by the Treasury Department's inspector general for tax administration.
The tax credit, which is supposed to pay individuals up to $400 and couples up to $800, was President Barack Obama's signature tax break in the massive stimulus package enacted in February.
Most workers started receiving the credit through small increases in their paychecks in April. The tax credit was made available through new withholding tables issued by the Internal Revenue Service.
The withholding tables, however do not take into account taxpayers with multiple jobs or married couples in which both people work. They also don't take into account Social Security recipients with jobs that provided taxable income.
[. . .]
"While implementing a credit through reduced withholding is an effective way to provide economic stimulus evenly throughout the year, it is difficult to account for everyone's circumstances," said J. Russell George, the Treasury inspector general for tax administration. "More than 10 percent of all taxpayers who file individual tax returns for 2009 could owe additional taxes."
Separately, the IRS estimated that about 65,000 taxpayers could face penalties for not withholding enough taxes in 2009 because of the overly generous tax credits. However, those taxpayers will be eligible to have the penalty waived, IRS spokeswoman Michelle Eldridge said.
The depth and breadth of abject stupidity displayed by our leaders in Washington is truly breathtaking. They have no grasp whatsoever of the concept of "unintended consequences," even after their mighty debacle with Cash for Clunkers. Oh, wait... they believe CARS was a fabulous program with even more fabulous results! I, for one, greatly appreciate paying taxes so they can be handed over to someone else to buy a new car. I am financially unable to do this and, therefore, excluded from participating in a program I was nonetheless forced to help fund.
As to the acts of stupidity that created this "overly generous" tax credit problem, Congress is proving how that stimulus just keeps stimulating us, and they are definitely living up to the promise of Making Work Pay.... again and again and again.... Unless, of course, you are part of the +17% that happen to be unemployed or underemployed (more government smoke and mirrors to make themselves look better rather than reporting actual data). They can FUBAR a tax credit program that hurts the taxpayers it was intended to help, so naturally they can manage our healthcare, right?