If Congress doesn't approve an extension the Making Work Pay tax credit, our paychecks will shrink, according to CNN Money:
The credit, introduced last year as part of the government's stimulus package, boosts paychecks by up to $400 for single filers and up to $800 for joint filers, by reducing the amount of tax withheld from each paycheck.
And that extra $15 bump you're used to getting each bi-weekly pay period is slated to expire at the end of the year unless Congress votes to extend the credit, much like the Bush tax cuts.
Not that that extra $7/week made a huge difference over the last year in my own spending habits, but $7 is $7--$7 I earn and want to keep.
So if Congress does approve the credit extension, what will you do with your $7/week? Will you pay for a game of bowling or for the shoe rental? Because sadly, this Obama-version of weekly "tax relief" won't pay for both...
"You hear a lot about the Bush tax cuts, but surprisingly, the [Making Work Pay credit] isn’t getting as much attention as you would think," said Chuck Marr, director of federal tax policy at the Center on Budget and Policy Priorities. ...
And because of the steep cost of keeping the Making Work Pay tax break around — about $60 billion to extend it one year — Marr said he wouldn’t be surprised if Congress doesn’t end up passing the extension.
On the contrary, I think Sweetness & Light has the correct political prediction here:
Don’t worry. At the very last minute Mr. Obama will step in and demand that this ‘middle class tax’ cut must be saved at all costs. And a heroic Congress will dramatically vote to extend it into perpetuity. – Without paying for it, of course.
Then Mr. Obama and the Democrats will trumpet this ‘middle class tax cut’ as their great gift to the economy and job creation. Meanwhile, they will let the Bush tax cuts lapse. Tax cuts which actually could make a real difference to people and to the economy.