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So what are you going to do with $1.39 more a week?
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The government giveth and the government taketh more away.
Keep that in mind before you start celebrating the pittance the federal government is sending your way to “stimulate” the economy.
Single taxpayers in 2009 are having their federal income tax liability chopped $400 while couples will get an $800 savings. It figures out to $7.69 a week for singles and $15.38 a week for couples. Now, you might be thinking every little bit helps, right? Guess again. The real question is who does it really help?
By the time all the dust settles, it’s a guarantee you will end up paying more in taxes.
Let’s take the “average” Manteca household making $62,000.
Assume that they have two cars valued at $10,000 apiece based on the Kelly Blue Book. The change in the state’s vehicle license fee rate from .65 of value to 1.15 of value will mean a $100 increase per household. Of course, to have cars of that value they have to be 7-year-old clunkers or a low end newer vehicle. The state appropriations calculation actually puts the cost at closer to $140 per household
The new sliding scale surcharge on their state income tax bill costs that couple at least $175 more a year.
The 1 cent increase in state sales tax will cost them $200 and that’s the low end of the scale.
Assuming everything is at the low end in terms of new state taxes, you are at $525. That, however, is not the whole story. Since the federal government is reducing taxes by $800, that gives couples who take federal deductions more income that the state can tax. Again, going on the low end of things that is another $130 to the state. Now we are at $655. So if you drive a semi-clunker, have plenty of deductions and spend on the lower end of the scale on taxable items you just might come out with $145 in your favor after the state takes what the federal government is “giving” you.
Of course, the real good news is that the “stimulus” from the federal government won’t be around in 2010 so you’ll be out $655 no matter what next year. That’s $145 for a couple to go out and “stimulate” the economy this year or $2.78 a week but they’d better hurry. Jan. 1, 2010 is coming awfully quick.
And if you’re single, you are almost guaranteed that it will cost you more per capita thanks to the state’s taxing system. But let’s assume it is equal to the individual in a marriage. You’d better go out and blow that $1.39 a week you’ll be getting this year because you’re going to pay the state through the nose starting in 2010.
If most people are watching their money, they will simply refrain from buying new vehicles and watch their spending. So when all is said and done, the federal stimulus actually will end up with Californians spending even less.
Meanwhile the greedy bozos that caused this mess make out like bandits including those who had to knowingly lie about their income while buying more house than they could afford. So while you’re eating Top Ramen your neighbor who the government may save from foreclosure will get his house payments reduced plus over five years get as much as $5,000 in a performance bonus to encourage him to make his mortgage payments on time. It’s all part of the Fantasy Island Housing Stimulus Plan being pushed with a $275 billion price tag
Of course, if your neighbor had been a responsible borrower in the first place we wouldn’t be in this mess.
In defense of the folks back in Washington at both the White House and in Congress, they believe that giving individual taxpayers more money – reduce their taxes – won’t stimulate anything. They contend all we’d do is hold on to the money or pay down debt, two foreign concepts to politicians. Who wouldn’t horde what crumbs of our money that we get back knowing that Uncle Sam and his kissing cousins in Sacramento are going to shake us down for more money?
Congress should just cut out the middle man and send the money directly to Sacramento. At least that way they’d be completely honest.
Of course, they’d argue that Washington operates independent of Sacramento and the working stiffs. Besides, Washington D.C. is addicted to getting a high created by the spending and printing of green backs.
Why practice prudence?
What really would work is the government putting a freeze on effective individual tax rates for five years or so by increasing the upper limit of each tax bracket by $10,000. That way the little guys on the bottom will benefit the most and the guys on top the least.
That way a little guy who may get a pay raise in 2010 – he probably won’t get one this year – won’t have to worry about Uncle Sam kicking him up a tax bracket.