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$400 Stimulus Payment Dumbness Update

by Smithee on March 31, 2009

in Economy

A few weeks ago I wrote a short piece explaining that while even if you think the “Making Work Pay” tax credit of $400 is a bad idea, at least we’re saving money this time by not sending out two letters and a check to every household in America. In short: the stimulus process could’ve been dumber.

In the comments of that article, Laura said:

Yes but now the government will have to reprint and mail out the employee withholding schedules that small employers use to figure up those weekly paychecks. This is why it will take a few months to see that $13. It goes both ways.

I wasn’t sure if Laura was correct about that. I work for a small company, so I figured I’d wait and see.

This morning, my co-workers and I saw our Federal Withholding decrease for the first time as a result of the “Making Work Pay” tax credit. My personal take-home pay is $33 more (we get paid twice a month).

So I asked our Accounting department about the process, and I got this in reply:

It’s actually a change in the Withholding Table. The Table is downloaded from the IRS electronically and then based on your W4 elections and pay scale, the amount will automatically adjust.

Granted, there are probably some companies who don’t do everything electronically, and as a result might need a paper form to be sent, but in our case, and I suspect most other companies, this process didn’t cost anything.

So, in short: the stimulus process could’ve been even yet still dumber.

(More about the Tax Credit from the IRS.)

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The $400 Stimulus Payments Could’ve Been Dumber

by Smithee on February 18, 2009

in Economy

The American Recovery and Reinvestment Act of 2009 includes, along with all the spending, the biggest middle-class tax cut in American history. Ignoring all the stuff about housing and small businesses and car sales, this will mean a yearly saving of $400 for individuals, or $800 for couples.

It’s not a lot of money. People who are better at math than me have calculated it’s about $13 a week that people otherwise wouldn’t have had. That amount means more to some people than it does to others. We’ve certainly seen in the comments at Consumerism Commentary how people who have to, can stretch dollars quite far.

It’s a small consolation, however, to realize that this “biggest middle-class tax cut in American history” is being enacted more wisely than the tax cuts we’ve seen since 2001. Namely, it’s happening at the paycheck level. The IRS is just going to start withholding less for the people who receive the tax cut, instead of sending out $400 stimulus checks.

We’re going to be saving a lot on paper and postage, not to mention the fact that we won’t be sending out an additional letter before the check, explaining that the check is on its way.

I did say it was a small consolation.

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