Did the $400 tax cut get halved?; Update: No

posted at 10:12 am on December 15, 2009 by Ed Morrissey

Note: See update below. The tax cut is applied elsewhere.

Barack Obama campaigned on a promise to give middle-class Americans a tax cut as soon as he got into office.  Early this year, he enacted a cut that promised a $400 reduction in taxes through the hilariously named Making Work Pay tax credit program, and adjusted withholding tables to reduce the weekly tax bite by $13 to put the money in our pockets immediately.  Now the 2009 tax tables have been published, and the tax cut looks like half of what was promised.

First, let’s look at the tax tables for single filers in income levels between $5,000 and $65,000 per year, comparing the 2008 tables to 2009:

Taxable income 2008 Tax 2009 Tax Cut
$5,000 $503 $503 $0
$10,000 $1,103 $1,086 $17
$15,000 $1,853 $1,836 $17
$20,000 $2,603 $2,586 $17
$25,000 $3,353 $3,336 $17
$30,000 $4,103 $4,086 $17
$35,000 $5,100 $4,944 $156
$40,000 $6,350 $6,194 $156
$45,000 $7,600 $7,444 $156
$50,000 $8,850 $8,694 $156
$55,000 $10,100 $9,944 $156
$60,000 $11,350 $11,194 $156
$65,000 $12,600 $12,444 $156

As we can see, we’re solidly in the middle class, well above the national average income of $50,000, and the tax cut only comes to $156 — less than half of what Obama promised. However, some may claim that Obama promised that tax cut to middle-class families, which means we should be looking at the Head of Household columns instead.  Of course, the withholding got reduced on an individual basis, which means single filers will have more taxes to pay at the end of the year, but it’s a fair point.

This time, let’s look at the family tax rate difference between 2008 and 2009, all the way through to $88,000 per year.  That’s four times the poverty level, and it’s where the federal government would cut off health-insurance subsidies in ObamaCare if it passes.  Do we get $400 in tax savings per family for these middle-class households?

Taxable income 2008 Tax 2009 Tax Cut
$5,000 $503 $503 $0
$10,000 $1,003 $1,003 $0
$15,000 $1,681 $1,656 $25
$20,000 $2,431 $2,406 $25
$25,000 $3,181 $3,156 $25
$30,000 $3,931 $3,906 $25
$35,000 $4,681 $4,656 $25
$40,000 $5,431 $5,406 $25
$45,000 $6,319 $6,156 $163
$50,000 $7,569 $7,359 $210
$55,000 $8,819 $8,609 $210
$60,000 $10,069 $9,859 $210
$65,000 $11,319 $11,109 $210
$70,000 $12,569 $12,359 $210
$75,000 $13,819 $13,609 $210
$80,000 $15,069 $14,859 $210
$85,000 $16,319 $16,109 $210
$88,000 $17,069 $16,859 $210

No, we don’t. In fact, we only see slightly more than half of the promised savings through $88,000 incomes. Do we ever see $400 in income-tax cuts? Not on the 1040 tax schedules as printed, which only go to annual income levels of $99,000, and where the reduction remains $210 for families.

It looks like Obama has made Making Work Pay into a net cost at the end of the year for taxpayers.  Other tax credits will come into play, too, but the withholding relates directly to these tax tables — and it looks like Obama’s program forced everyone to underpay their taxes this year.

Update: I’ve gotten updates from two readers who point out that the MWP credit gets applied separately on the 2009 1040. It’s not part of the tax tables, as HA reader Hillary explains:

I don’t care for Obama either, but your article about the tax credit getting halved is incorrect. If you look on an 09 form you will see that you still get the $400 or $800per family. It appears separately below the total tax and separately on the return as a schedule M. The Making Work Pay credit was not built into the tax tables as you showed. So, technically people are getting the usual tax table adjustment for inflation of $156 PLUS the $400 or the $210 + the $800 for families.

And that’s good news for everyone. Thanks for the clarification.


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What the hell you people doing buying a house now? Prices will be falling for years to come. The $8K and $7.5K credits you got will be wiped out many times over.

angryed on December 15, 2009 at 10:49 AM

Yeah, I know… but the owner was a Real Estate agent eager to get out of the mortgage… so she wouldn’t lose her other home… We had it appraised and the price was well below… I knew the market would eventually catch up (drop) to meet us, but we wanted the house (schools, neighborhood, etc.)… we plan on being there for the long haul… and we are praying for a conservative resurgence in the near future.

mankai on December 15, 2009 at 11:26 AM

If only I had been a college professor from Iowa, I could have received some real money instead of Barry’s offer of chump change.

Or a member of ACORN. They get the big bucks too.

Or a Senator from Louisianna.

No I’m just a regular Joe, prepping to bend over.

fogw on December 15, 2009 at 11:27 AM

Actually, people work for reasons other than money–like that they have an inherent need to accomplish something.

Liam on December 15, 2009 at 11:19 AM

Sounds like you’re suggesting a 100% tax rate wouldn’t put a stop to all of society’s productivity, because people would still work to fulfill an inherent need to accomplish something. Interesting theory you’ve got there, comrade.

e-pirate on December 15, 2009 at 11:27 AM

I adjusted my withholdings to undo that change back in April. I’d rather owe than get a refund, but I don’t like to owe a lot, and certainly don’t like to owe penalties.

SnowSun on December 15, 2009 at 10:34 AM

I did the same thing, jerked it back up immediately. I calculate my tax liability as close as possible at the first of every year and try to end up owing the feds about a hundred dollars.

Oldnuke on December 15, 2009 at 11:27 AM

This guy must think we are absolutely stupid. When my withholding was reduced I increased by quarterly estimated taxes by an equal amount. Had I not done this my end of year taxes would have increased and the withholding decrease would have been recouped. Furthermore, my 2010 withholding was increased by about $17.00 a month even though my income remained the same. Smoke and mirrors can’t begin to define the stupidity and gaul of this administration and their contempt they have for the People.

rplat on December 15, 2009 at 11:30 AM

There will be some angry people in April when they find out that Obama’s stash is taking further deposits.

farright on December 15, 2009 at 11:31 AM

Just bend over, grab your cankles, and enjoy…

What, you actually believed Obowma?

BBBBBBBWWWWWWWAAAAAAAHHHHHHHAHAHAHAHAHAHAHAH!!!

Seven Percent Solution on December 15, 2009 at 11:32 AM

I say we file a class action lawsuit, for fraud on this, and for our pain, and suffering, take these corruptocrats to the cleaners.

capejasmine on December 15, 2009 at 11:32 AM

Sounds like you’re suggesting a 100% tax rate wouldn’t put a stop to all of society’s productivity, because people would still work to fulfill an inherent need to accomplish something. Interesting theory you’ve got there, comrade.

e-pirate on December 15, 2009 at 11:27 AM

No, tovarish, I didn’t suggest anything other than counter one of your assertions, giving you other ideas that are also inclusive of making money. It’s a package.

I thought you would have understood but apparently you didn’t. Seems we don’t know each other very well, do we?

Liam on December 15, 2009 at 11:35 AM

Next year’s tax table:
Rainbows and Pink Unicorns!
Candy and Gumdrops!

Haiku Guy on December 15, 2009 at 11:35 AM

Actually, thinking back to my earlier statement, there will be some unsettling news for some people, as they tax withholding is back to what it should have been come the January payroll.

A lot of people will be scratching their heads over the tax “hike” at that time. Then they’ll get hit with the rest of it when they file their 1040′s.

Keith_Indy on December 15, 2009 at 11:36 AM

e-pirate on December 15, 2009 at 11:27 AM

A long time ago the company I worked for had a real retention problem. Licensed reactor operators were leaving in droves to greener pastures and bigger bucks. A company PR hack came out to give us all a lecture on loyalty and job satisfaction. About half way through I stood up and interrupted him. I told him that to check his theory put two stacks of paper on the table. One a stack of hundred dollar bills and the other certificates of appreciation and let each operator take one of either the money or the certificate and see which one ran out first. I then gave him a quote which has stuck with me ever since that day. “People work for money, if you want loyalty buy a dog.” Then my entire crew got up and walked out of the lecture. Shortly after that the company started throwing money at us and guess what. Their retention problem went away.

Oldnuke on December 15, 2009 at 11:36 AM

e-pirate….dude give it up. I gave you 2 examples of libs asking for a 100% marginal tax rate. Both times you squirmed and evaded and broke your promise to leave HotAir. You are a liar. But you are also a liberal, so I repeat myself.

angryed on December 15, 2009 at 11:38 AM

Please see the update in the story. The tax cut gets applied as a credit.

Ed Morrissey on December 15, 2009 at 11:39 AM

Ed Morrissey on December 15, 2009 at 11:39 AM

Thanks for the update. And in blod and everything. See, this is what I love about Hot Air. When you’re wrong, you’re not afraid to say so. I wish that were the case everywhere on this net.

Abby Adams on December 15, 2009 at 11:49 AM

And in blod and everything.

Abby Adams on December 15, 2009 at 11:49 AM

“Blod”? Really? Should that be “bold” or “blood”?

/quit drinking in the morning

Abby Adams on December 15, 2009 at 11:50 AM

The Making Work Pay credit

This is why I hate the government. Making work pay. What a disgusting program name. I’m sure the sheeple that don’t produce a damn thing of value and simply deplete the wealth others create just eat this s@#t up.

The government doesn’t create wealth and has no mandate to make my work pay. I am not a slave to the damn government.

daesleeper on December 15, 2009 at 11:52 AM

“People work for money, if you want loyalty buy a dog.”
Oldnuke on December 15, 2009 at 11:36 AM

That was a good story.
Regarding the update: Well, well, well. The IRS has added another line…

SnowSun on December 15, 2009 at 11:52 AM

The government doesn’t create wealth and has no mandate to make my work pay. I am not a slave to the damn government.

daesleeper on December 15, 2009 at 11:52 AM

Our present government seems to think we are though and it’s imperative that we show them the error of their ways. All of them no matter what letter follows their name.

Oldnuke on December 15, 2009 at 12:02 PM

The update is another great reason for simple broad tax base that has single tax rate applied to it. KISS!

WashJeff on December 15, 2009 at 12:14 PM

e-pirate….dude give it up. I gave you 2 examples of libs asking for a 100% marginal tax rate. Both times you squirmed and evaded and broke your promise to leave HotAir. You are a liar. But you are also a liberal, so I repeat myself.

angryed on December 15, 2009 at 11:38 AM

Actually, you didn’t meet the challenge, and e-pirate didn’t break any promise. You shifted from total tax rate to marginal tax rate when you realized the examples you gave didn’t work. The second example you gave was especially dishonest because you left the last three words (“above this level”) out of what you quoted that totally changed the meaning.

The truth is, I’m sure there are fringe leftists out there who are really socialists and would like a 100% tax rate, but you didn’t find any, and the ones that exist probably aren’t mainstream in any way.

tneloms on December 15, 2009 at 12:15 PM

If this horrible “steal from the hardworking to give money to the lazy” dystopia you’ve created in your mind really were true, then it would imply that smart people would have more incentive to be unemployed than actually work, as they would get all the money anyway. Since you’ve got such a keen intellect, you should probably put in your two weeks notice.

Or maybe your wild exaggeration isn’t close to reality?

e-pirate on December 15, 2009 at 11:14 AM

Well you have confused ‘intellect’ with narcissism and selfishness. Even the most confused idiot, ringing any bells here, can have some dignity and EARN his way through life. And there are others that have no problem being parasites.

I know this concept is foreign to liberal douche bags like you, but there are a whole lot of people that feel it’s wrong to sponge off others.

Smart doesn’t really come into it, but you know that already.

BigWyo on December 15, 2009 at 12:21 PM

Ed, quick! Destroy all the raw data associated with this post!

Nethicus on December 15, 2009 at 12:38 PM

Funny how well we conservatives are willing to be corrected. Anyone think that if this error were on Huffington post say it would get as solid of a correction?

astonerii on December 15, 2009 at 12:43 PM

I appreciate the kind thoughts about the correction, but I’d rather have been right in the first place. ;-)

Ed Morrissey on December 15, 2009 at 12:46 PM

Even the most confused idiot, ringing any bells here, can have some dignity and EARN his way through life.

BigWyo on December 15, 2009 at 12:21 PM

I agree, the problem becomes earning from whom and how you earn it. Starting one’s own business is a distant dream now; the only place to get money is from those who already have it, which is largely big corporations. And if they “can’t” hire you…what’s the alternative? The days of being able to go west and try your hand at a farming/pioneering life are long gone.

Dark-Star on December 15, 2009 at 12:59 PM

Dark-Star on December 15, 2009 at 12:59 PM

Well gee, I guess it’s time to just lay down an die.

BigWyo on December 15, 2009 at 1:01 PM

Well gee, I guess it’s time to just lay down an die.

BigWyo on December 15, 2009 at 1:01 PM

Heh. Harder than you think, especially if you don’t want to leave a mess that will have whoever does cleanup duty won’t be able to unsee the scene. (I read an EMT’s post on some random forum about…responding to certain scenes…and it went a mile beyond heartbreaking. Can only imagine how much alcohol the guy’s been using as brainbleach over the years.)

Also, knowing that no note you leave behind will keep your family from going into hysterics is a definite hindrance…as is not wanting one’s siblings to ‘copycat’ someday later on. That’s a direct extension of the credo of “don’t take anyone else with you”, and anyone with a flicker of a conscience has to consider it very seriously.

Dark-Star on December 15, 2009 at 1:13 PM

What you’re ignoring, and was explained by my Tax professor, is that it changes your with holdings not you actual tax. This means that when tax season rolls around, people are going to owe money instead of have with holdings returned, and the problem is most people don’t know this. When tax season rolls around people are going owe 300 dollars that they probably don’t have.

SnKArcbound on December 15, 2009 at 3:54 PM

Me think your over thinking this.
Originaly Obama sold this as “$13 a weak”. This is based on “working families” meaning both Husband and wife are working.

The actual number or amount is $0.192 cents per hour based on a 40 hour week, per worker.

(All numbers rounded)

Or $400.00 per year, per worker.

($400.00/52) /40 = $7.69 per week

$7.69/40 = $0.192 per hour

$0.192x 8 = $1.536 per day

So the actual tax cut is $1.536 per day, so long as you still have a job.

Just enough to buy a bottle of soda on the way home from work!

Oh almost forgot.

That bottle of soda?

Obama wants to raise the tax on that bottle of soda, it has sugar in it ya know.

DSchoen on December 15, 2009 at 5:45 PM

The MWP “credit” is not applied on the 1040.

It’s handled at the point of withholding. All they did was reduce the amount withheld.

And that’s all they did. Just reduced withholding. They did not decrease anyones tax laibility in any way.

So it’s a shell game–you get your $400 “credit” in your paycheck over the course of the year, then you “refund” it (hence “refundable credit”, I guess?) back when it’s due as taxes because the withholding was too low.

RTO Trainer on December 15, 2009 at 6:07 PM

“Making Work Pay”???

You need to ask: “Who gets paid for my work?”

Obamacrat’s answer: “The government does, silly!!”

landlines on December 15, 2009 at 7:20 PM

Anyone listening to Rush Limbaugh earlier this year knows that all they did was change the withholding

VinceP1974 on December 16, 2009 at 8:21 AM

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