An increase in federal withholding taxes–for all income categories–basically giving the government an interest-free loan.
Recently, retired military have received e-mail messages notifying them of a withholding tax increase. The email states:
NO ANNUAL COST OF LIVING ADJUSTMENT (COLA) WILL BE ADDED TO MILITARY RETIRED PAY IN 2010.
DUE TO RECENT LEGISLATION YOUR FEDERAL WITHHOLDING TAX HAS CHANGED.
After much investigating and several discussions with the IRS, itappears the Democrats have played a “cash-flow trick” on workingAmericans and are taking more out of American’s paychecks across theboard–all the while touting the Making Work Pay tax credit.
The trick, when looking at the new withholding tax tables for 2010as compared to post-stimulus 2009, buries an increase in federalwithholding taxes–for all income categories–basically giving thegovernment an interest-free loan until current year taxes are filednext year. Some would blame the increase in withholding on the MakingWork Pay tax credit being spread out over 12 months as compared to2009, which was only over 9 months, but this would be impossible assome middle class wage categories carry an increase in the withholdingtax of over $200 per pay period.
Unlike the middle class wage earners, who are going to see hugeamounts taken out of their paychecks, unless they increase theirexemptions on their W4 form, it’s an increase that most wouldn’t evennotice–$10 or $20 in some cases. Here are some of the “highlights” ofthe new 2010 withholding tables: