Barack Obama’s plan to stimulate the economy may mean a heftier wallet come pay day. Using a tax break system for American’s earning under $50,000 paychecks during the first quarter of the year will be larger.
The calculations say that increase could be an extra $83 to $166 per pay period. This is also expected to be part of the permanent tax cut he’ll have in his upcoming budget.
During the past year Obama promised to help middle- and low-income homes. Another promise includes an increase to the earned income tax credit for families and an increase in the Hope credit to pay for educational expenses.
There is also a promise to seniors that have incomes under $50,000 to stop having to pay income tax.
The most likely promise to have immediate impact though is the Make Work Pay Credit. The proposed credit would equal to $500 a year for individuals and $1,000 for couples. The delivery of the credit comes in the pay check with employers reducing the tax withholding.
Those making over $75,000 up to $85,000 would get a partial credit while the full credit will be there for those making below that amount. This credit will also be refundable, making sure that the low-income worker would not be given a tax liability at the end of the year.
If the tax break is given in full during the first part of the year the average worker would get more than the expected extra $19.23 per check. (based on a two week pay period) In that scenerio the average workers check would have an extra $83 per pay cycle as long as they recieve six paychecks between January and March.