Pirate's Cove

Yet another of a long line of “in kind” campaign contributions from the NY Times. Shocker

In a troubling sign for Democrats as they head into the midterm elections, their signature tax cut of the past two years, which decreased income taxes by up to $400 a year for individuals and $800 for married couples, has gone largely unnoticed.

In a New York Times/CBS News Poll last month, fewer than one in 10 respondents knew that the Obama administration had lowered taxes for most Americans. Half of those polled said they thought that their taxes had stayed the same, a third thought that their taxes had gone up, and about a tenth said they did not know. As Thom Tillis, a Republican state representative, put it as the dinner wound down here, “This was the tax cut that fell in the woods — nobody heard it.”

Fausta discusses why no one actually knew about it, so, head on over for that discourse.

The thing was, it wasn’t really a tax cut: it was a change to the withholding, which let people keep more money in their weekly checks, if they made less than $95,000 as an individual/$190,000 joint filing. Furthermore, said “tax cuts” are, from everything I’ve read, slated to end at the beginning of 2011. If you are keeping $13 extra in 2009 and $7.70 in 2010 per week, it’s kinda hard to notice. That money doesn’t induce people to go out and spend. (BTW, I wasn’t thrilled with the rebate checks sent out, either. Though, I did go out and spend mine on a Kindle and some other stuff)

This is the pattern, and a big part of the problem with the Democrat policies: everything was short term. Instead of a one off or couple years, they should have passed the tax cuts/rebates/exclusions for at least 3 years. A year or two doesn’t persuade businesses, especially small businesses, to hire and expand. Not too mention things like the weatherization credits when people weren’t spending in the first place.  And let’s not forget all the taxes they were raising, such as on cigarettes and tanning.

There are plenty of explanations as to why many taxpayers did not feel richer when the cuts kicked in, giving typical families an extra $65 a month. Some people were making less money to begin with, as businesses cut back. Others saw their take-home pay shrink as the amounts deducted for health insurance rose.

And taxpayers in more than 30 states saw their state taxes rise, according to the Center on Budget and Policy Priorities.

Again, how do states get their operating coinage? Income tax. Property tax. Sales tax. Corporate tax. Money back from the federal government. Fees. Fines. Lottery. Other small ways. Obviously, not every state has all. What happens when people are not working and/or concerned with an economic downturn? Purchasing goes down. Less people working. So, state revenue goes down. They can’t operate a deficit. Yet, they don’t want to cut back. So, state taxation goes up. Bad move. As the Times points out, that happened here in North Carolina. And our unemployment was sitting at 9.7% for August, 36th worse in the nation.

PS: don’t forget that the tax credit came back to bite about 15 million 2009 filers to the tune of $250 to $400, virtually halving the net payout. Same thing for 2010. Hell, they knew about this issues back in April, 2009.