Tax Cuts Still Likely
So, with all the economic turmoil, can those of us in the middle class still expect a tax cut from Barack Obamaâ€™s administration? Yes we can.
By all accounts, Obama is committed to making middleclass tax cuts part of the stimulus package he hopes to sign into law shortly after taking office. The cuts will likely be of the tax credit variety which he proposed during the campaign. Although, to make those credits available more quickly, the IRS and employers could add the money directly to paychecks rather than mailing out refunds.
Mind you, this would be an effective lowering of payroll taxes, not income taxes, meaning that the lost revenue for Social Security, Medicare and Medicaid will eventually have to be covered through other means. Itâ€™s too tricky for my tastes, but the surest way to get more money into the economy is to give consumers more spending power, not with a one-time â€œstimulus checkâ€ but with a permanent tax decrease.
Obamaâ€™s tax plan will likely look different once Congress gets through the bargaining and wrangling, so Iâ€™ll avoid getting into the minutiae of what would and would not be best until thereâ€™s an actual plan on the table. But, for now, it does look like Obama plans to live up to his promise of cutting taxes.