Obama’s Tax Credit Takes Effect on April Fool’s Day
Those who are eligible for the tax credit will get the money gradually – paycheck by paycheck -- not in a lump sum. For many earners, it works out to an extra $15 or $20 per paycheck.
House Speaker Nancy Pelosi said the tax cut comes to you from Democrats who passed the stimulus bill, which President Barack Obama signed into law last month.
“The Making Work Pay tax cut will put more money in workers' paychecks each week, helping to jumpstart our economy and provide some much-needed relief to Americans who are having a difficult time making ends meet,” Pelosi said in a news release.
"With the Making Work Pay tax credit, President Obama and Congress have made clear that American families are at the top of our agenda."
Individuals with modified adjusted gross incomes of $75,000 or less can expect to receive the full $400 credit, spread over one year. Married filers will get their full $800 credit if their modified adjusted gross income is $150,000 or less.
The credit – available this year and next year only -- will phase out for people making more than the amounts mentioned above.
Most Republicans support lower taxes, but they say the Democrats’ tax credit will not do much to stimulate the economy.
"We've given people bonus stimulus checks and it hasn't worked,” Rep. Eric Cantor (R-Va.) says on his Web site. “Again, if we're talking about meaningful tax cuts to stimulate the economy, we ought to be looking at marginal rate reduction," he said.
Even as the “Making Work Pay” tax credit takes effect, Democrats in Congress are planning to remove Obama’s long-promised middle-class tax cut from the Fiscal Year 2010 budget, House Republican Leader John Boehner warned.
Moreover, Democrats are pressing for a new national energy tax – a tax on carbon that companies would pass on to consumers. Republicans say it could cost every American household as much as $3,100 a year.