Making Work Pay news article

[elfling]

Came across this on the AOL homepage this morning:

http://www.walletpop.com/blog/2009/11/17/surprise-theres-no-news-on-tax-credits/

I like the way Kelly Erb hits the nail on the head.

[jainen]

>>Kelly Erb hits the nail on the head<<

I'm still not sure if it's a nail or a screw. The author seems a bit ambivalent too. She concludes that "there's nothing to see here," but before that she predicts a possible "disaster."

And what does she mean by, "there is the potential that the withholding from one job could run up the bracket, resulting in too much credit withheld"? In my opinion, withholding brackets are based on income, not withholding itself.

And how could she be more irresponsibly wrong than saying, "Retirees and the disabled are not affected by the credit." The new withholding tables are in Pub 15-T, which makes it very clear that, "For the calculation of income tax withholding on pensions, the new withholding tables also apply." In my opinion, underwithholding would count as an effect.

[elfling]

Good points, Jainen.

I was particulary struck by Kelly's paragraph below as that proverbial nail:

"Realistically, advance credits and payments are always fraught with the potential for disaster. They're a particular thorn in the side for tax preparers who may have to explain the consequences to taxpayers after the fact. But politicians love them. As a result, this is not the first to come down the pike and it certainly won't be the last (though I imagine it would be if tax pros ran the world)."

It unfortunately does fall to us, thorns and all, to try to explain the fall-out to taxpayers who haven't a clue. The extreme reverse side of that coin is that if some administration would ever succeed in creating a super-simple, super-streamlined tax return/system [totally wiping out the current code, of course] without credits, special programs, complexities of itemizing, etc, etc, we would all need to look for other avenues of work.

[kcjenkins]

Which is a trade-off I'd be happy to make.

[bigdadder]

I would be happy to make that trade-off too, KC.

Bigdadder

[Gail in Virginia]

That trade off is not likely to happen. If a politician did manage to streamline the tax code that dramatically, within twelve months some special interest group would have convinced some other politicians to add back just this one exception that is so important to fair tax administration and economic policy, and before you know it our vacation would be over. At least that is my guess as to what would happen. :wacko:

[kcjenkins]

I agree. That is why although I approve of the idea of a national sales tax to replace the income tax, I would never support it unless they also repealed the 16th Amendment. Otherwise, within a few years we'd end up with both.