Obama's tax compromise raises taxes on the poor

[bemused_leftist]

Now, in compromising with congressional Republicans, the president seems to have forgotten his own logic and agreed to big tax cuts for the rich and tax increases for the poor.

Why would the working poor pay more? Because the proposal would replace this year’s Making Work Pay (MWP) credit with a temporary reduction in the Social Security payroll tax from 6.2 percent to 4.2 percent. That’s a good deal for high earners, who got nothing from MWP (thanks to an income phaseout), but a bad deal for those making $20,000 or less. [....]

If Congress and the president accept the compromise in its current form, a single worker earning $10,000 will see her taxes jump by $200 from this year to next—her $200 payroll tax cut replaces her $400 MWP. And a couple earning $25,000 would lose $300 as its $800 MWP morphs into $500 in payroll tax savings. Nothing else in the compromise tax agreement compensates for those losses.

http://blogs.forbes.com/beltway/2010/12/09/the-obama-gop-deal-a-tax-hike-for-the-working-poor/

Comments

[cbpotts.livejournal.com]

Great. That MWP credit makes a real difference on our tax return - whereas a 2 percent (or I guess 4 percent, since I'm self employed) reduction in SS payroll tax does basically diddly squat.

But hey, you can make $250,000 in this country and not be rich.

[bemused-leftist.livejournal.com]

Ya, let's give them a geographical cost of living adjustment, so they stay in the cities and don't come out here. ;-)