Just another reason for a VAT or Flat rate Tax and delete the IRS. I received the following after writing to a Florida Senator,
Dear Mr. Cable:
"Thank you for contacting me regarding the expiration of the Making Work Pay tax credit, which was enacted in the American Recovery and Reinvestment Act of 2009.
The Making Work Pay tax credit was a credit of 6.2 percent of earned income up to a maximum of $400 per individual. It was available in 2009 and 2010. Earned income includes salaries, wages, tips, professional fees, taxable scholarships and grants, and compensation for services performed. Earned income does not include income from capital gains, pensions, and investments. Because earned income does not include most retirement income, I have supported efforts to create a similar benefit for retirees.
The Making Work Pay credit was delivered to taxpayers by lowering the level of income tax withheld from monthly paychecks. Unfortunately, although pension and retirement income did not qualify for the Making Work Pay credit, many retirees nonetheless had their tax withholding reduced because pension administrators used the same withholding tables as employers. As a result, expiration of the credit at the end of 2010 has resulted in an increase in tax withholding for some retirees.
The amount of tax withholding is not the same as the amount of tax due. Because pension income was not eligible for the Making Work Pay credit, expiration of the credit should not result in higher tax liability for most retirees. In addition, taxpayers have the option to decrease the amount of tax withheld from their pension checks, or eliminate withholding altogether by filing IRS Form W-4P, Withholding Certificate for Pension or Annuity Payments. However, keep in mind that failure to withhold a sufficient amount can result in an estimated tax penalty when income taxes are due.
While we work to strengthen our economy, I remain mindful of the financial difficulty faced by millions of Americans, including many seniors, and I am open to new ideas that will provide meaningful economic relief to Floridians.
I appreciate hearing your views. Please don’t hesitate to contact me again".
Thank you. Finally a clear and I think articulate answer. Important information for anyone who received government retirement checks for the past 2 to 3 years.
I've been drawing a retirement check for my service for a lot longer than 2 or 3 years and beleve me, you ain't seen nothing yet. It will only get worse.
Marshall
