Hannity falsely claims that tax credit correction amounts to "tax hikes"
Discussing a report by the Treasury inspector general finding that millions of Americans may have received more money from the Making Work Pay tax credit than they were entitled to and that they will have to repay the excess on their 2009 taxes, Sean Hannity falsely claimed that the Obama administration "has found a way to disguise tax hikes as tax credits." In fact, those taxpayers would not be subjected to any "tax hikes"; they would need to repay only the amount they were overpaid.
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Hannity falsely claims Obama administration "has found a way to disguise tax hikes as tax credits"
From the November 17 edition of Fox News' Hannity:
HANNITY: And another key element of the Obama administration stimulus plan is backfiring in a major way. According to a Treasury Department report, millions of Americans may have to repay part of the Making Work Pay tax credit. Now, you may remember the so-called tax break was one of the White House's top talking points on the stimulus plan.
ROBERT GIBBS (White House press secretary) [video clip]:The Making Work Pay tax credit, which gives $800 for a working households, as I said, helps 95 percent of working families. [...] And it is the most workers to -- as the president said -- the most workers to ever receive a tax cut in the history of this country. [...] During the recovery period, Making Work Pay is expected to put more than $100 billion into the pocket of hard-working Americans.
HANNITY: All right, guess what, Robert? Fifteen point four million Americans may soon have all that money taken right back out of their pockets. Now, the Treasury's inspector general for tax administration says because of this credit, taxpayers may have had too little withheld in 2009 and may be forced to repay the IRS when they file in 2010. Now, somehow the anointed one has found a way to disguise tax hikes as tax credits. Simply amazing.
However, taxpayers will need to repay only amount they were overpaid, not any additional "tax hikes"
Treasury report: About 15.4 million receiving more money than they should from Making Work Pay tax credit. The November 4 report by the Treasury inspector general for tax administration that Hannity cited found that "more than 15.4 million taxpayers could unexpectedly owe taxes for Tax Year 2009 as a result of the Making Work Pay Credit" because the credit "was implemented using new income tax withholding tables" and that taxpayers may have received more money from the credit than they were entitled to. As the Los Angeles Times reported, "A person working two jobs, for instance, could have received twice the amount in tax credits and would have to pay back half of it."
IRS reportedly said most people will see reduced refund rather than owe money. A November 16 Bloomberg News article reported that workers who received a credit in excess of what they were entitled to "will have to return the difference when they file tax returns" and that "to the degree any workers are affected, IRS spokeswoman Michelle Eldridge said, most people will see a reduced refund in 2009 instead of owing money. About three-quarters of Americans got refunds that averaged $2,836 as of Nov. 6, she said." A November 17 Washington Post article similarly reported, "While the inspector general's report estimated that millions of taxpayers will be negatively affected by the tax credit, a Treasury official said the vast majority will only receive a slightly reduced refund and not an out-of-pocket tax liability on April 15."
Taxpayers facing penalties due to correction can ask IRS to waive penalties. According to the Treasury inspector general's report, some taxpayers who received a larger credit than they are entitled to "may have their taxes underwitheld to the extent that they will be subject to the ES [estimated tax] penalty." The Associated Press reported on November 16 that "the IRS estimated that about 65,000 taxpayers could face penalties for not withholding enough taxes in 2009 because of the Making Work Pay tax credit. However, those taxpayers will be eligible to have the penalty waived, IRS spokeswoman Michelle Eldridge said." In its response to the Treasury report, the IRS said, "For the upcoming tax filing season, the IRS will alert taxpayers that they may qualify for a waiver and provide instructions on how to request a waiver of the penalty."
Nice people we have around here.
I have no responsibility to babysit you. If you're old enough to type and post, then you're old enough to be told to read the posting before making us tell you the answer that would have been readily available had you read the posting!
I have no idea what side of the aisle they're on. It doesn't matter. The answer was in the posting. People shouldn't post questions like that before they've even TRIED to figure out the answer on their own.
This person's post came 4 minutes after the article was submitted by MMFA - they didn't even TRY to educate themselves.
And you suggest that the ignorant poster deserved more respect than they got? They didn't. And the fact that they didn't understand their error, and instead blamed me, trying to make themselves into a victim, exposes how bereft of content their objection really was. They were justly called out for what they did, and they aren't a 'victim'.
It said it in about 3 places. Below are 2 of the main ones, right in the first couple of paragraphs!
"HANNITY: And another key element of the Obama administration stimulus plan..."
"Now, you may remember the so-called tax break was one of the White House's top talking points on the stimulus plan."
And then you can listen to the clip, and there's info on there with Robert Gibbs talking about the tax credits back in April of this year.
It may have been an Obama tax credit, even if he wasn't in office last year. Is this what folks would call "calender challenged" ?
Only a few people will get caught by this because they aren't eligible for it but there's no way to exclude them.
It's not a tax credit.
You don't get dinged because of your political leanings - you get dinged because you're too ignorant and/or uneducated, yet you come here allegedly to educate us!
But if this were private industry and suddenly they discovered something like this, the person responsible would probably be fired, because they just can't ask for money back, like ya right, go get the money and get a finger in your face.
Private industry can't afford this type of ineptitude, they most likely can't recoup their losses so they do cross their T's and dot their I's, because they have too. The government doesn't operate under the same set of constraints so they can screw up whenever they want and still come out whole.
In any event, I still say government operates under far less stringent accountability than private companies do - therefore making mistakes and inefficiency is all part of the bureaucracy.
As for the thumbs up/thumbs down, I don't pay it any attention and never do either. You always offer constructive posts of fairness from what I have seen, so you probably don't "thumb" anyone.
To go down that path is disastrous.
I think part of the point is, if the government is this ineffecient, how are they going to run another 20% of our economy (Healthcare)
Generalization troll. Again.
Seems to me that was out and out deception. Sort of along the lines of one of those loan shark operations that advance folks money on their paychecks.
MMFA pointed out that Hannity falsely claimed that the government getting back an overpayment is a tax hike. It's not.
Kids who are dependents aren't eligible for the tax credit. When it was given in a lump sum, they didn't get it, but when it's given out piecemeal like this one was, there's no way for the IRS or the employer to know that the worker is a dependent - there's not a separate category for them for withholding numbers. People who have 2 or more jobs at the same time will get twice as much taken out as they should get - again, there's no fundamental way for them to have remedied that.
Now, they could have better informed people, that's for sure, so that any individual who will be affected would know to go to the payroll dept at their work and adjust their withholding to avoid this problem, but it's not massive government ineptitude as you describe. It's up to the individual to fix this. There isn't a systemic fix that they could have used.
There's a PDF you can read that explains more about what caused the problem and why.
Much of the tax credit that Bush gave us in the late spring/early summer of 2008 got saved, not spent, because it was given in a lump sum!
And yeah, $15 a week multipled by millions of workers added a ton of money to the economy! It was a great idea, if we had to have tax cuts, which the Republicans insisted upon.
No one who was entitled to the money is having to pay any back, so no, it's not an oops, we need "that" money back - people who were supposed to receive it get to keep it. The money did help the economy. Each and every week, more money was spent than would have been spent if we had just gotten it all at once.
Oh, and Sue, do you have a link to back up your claim that "Much of the tax credit that Bush gave us in the late spring/early summer of 2008 got saved, not spent, because it was given in a lump sum!"
Do you have any evidence, any at all, that I'd make a claim like that and not have the facts to back up what I said? Of course you don't, because that's not the way I behave.
You can find it too, if you really wanted the info. But you don't. You simply want to throw out personal attacks when you can't win by deceiving people with your nonsense.
But I will provide the link should anyone else want it.
Here's a survey from people who said that they wouldn't spend it - only 30% planned on spending it! And it needs to be spent on new stuff to stimulate the economy.
Then here's another link to a paper done by NBER, the nonpartisan group that figures out when recessions start and stop. And what do they say? That the savings rate went up noticeably in May and June, when the rebate checks went out, first off. They also say that the 2001 tax rebate had similar results. Their recommendation is that "those designing the next stimulus package should take into account that much of a temporary tax rebate is likely not to be spent", and therefore isn't stimulating to the economy.
Only one-fifth of respondents to a rider on the University of Michigan Survey Research Center's Monthly Survey said that the 2008 tax rebates would lead them to mostly increase spending. Almost half said the rebate would mostly lead them to pay off debt, while about a third saying it would lead them mostly to save more. The survey responses imply that the aggregate propensity to spend from the rebate was about one-third, and that there would not be substantially more spending as a lagged effect of the rebates. Because of the low spending propensity, the rebates in 2008 provided low "bang for the buck" as economic stimulus. Putting cash into the hands of the consumers who use it to save or pay off debt boosts their well-being, but it does not necessarily make them spend. Low-income individuals were particularly likely to use the rebate to pay off debt.
Here's another one from Martin Feldstein in the Wall Street Journal. And what does he say?
Those of us who supported this fiscal package reasoned that the program would boost consumer confidence as well as available cash. We hoped the combination would cause households to spend a substantial fraction of the rebate dollars, leading to more production and employment. An optimistic and influential study by economists at the Brookings Institution projected that each dollar of revenue loss would increase real GDP by more than a dollar if households spent at least 50 cents of every rebate dollar.
The evidence is now in and that optimism was unwarranted. Recent government statistics show that only between 10% and 20% of the rebate dollars were spent. The rebates added nearly $80 billion to the permanent national debt but less than $20 billion to consumer spending. This experience confirms earlier studies showing that one-time tax rebates are not a cost-effective way to increase economic activity.
And one last link and a couple of snippets from it.
The record of past tax rebates is checkered, and forty bucks a month doesn’t sound like much. But the very things that seem unusual about Obama’s rebate plan—that it will be handed out by reducing withholding, instead of in one lump sum, and that it will add a small but steady amount to Americans’ take-home pay—are precisely why it’s more likely to succeed.
If you want people to spend the money, you don’t want to give them one big check, because that makes it more likely that they’ll think of it as an increase in their wealth and save it. Instead, you want to give them small amounts over time. And you want the rebate to show up as an increase in people’s take-home pay, because an increase in steady income is more likely to translate into an increase in spending. What can accomplish both of these goals? Reducing people’s withholding payments.
Read more: http://www.newyorker.com/talk/financial/2009/01/26/090126ta_talk_surowiecki#ixzz0XHfxhVZ4
And tax rebates that one is not entitled to are not one's money. People aren't entitled to those rebates aren't entitled to them - it's pretty darn simple. People who are dependents, for example, aren't entitled to the same standard deductions that others are entitled to. People who work two jobs aren't entitled to double rebates.
Your word parsing is legendary here, so I'm not surprised that it showed up here. But it's still a character flaw on your part.
Of course instead of giving millions of people a few dollars, you would rather give one person millions of dollars.
The only way to have a tax rebate do very much good at stimulating the economy is to do it exactly like Obama did it. You give it to the poorest people and you give it to them a little at a time, so they spend it. If you give it to them in a lump sum it gets saved or gets spent on paying down debt, not on making new and additional purchases. Paying down debt is not economically stimulating.