February 2010 Federal Tax Withholdings Plunge To Multiyear Low
February was not an auspicious start to Obama's record budget deficit-busting plans. The Daily Treasury Statement for the full month of February was just released, and it disclosed that while corporate tax withholdings, net of refunds, actually climbed marginally to $3.4 billion from $(3.4) billion in February 2009, individual tax withholdings plunged to a multi-year low of $30.7 billion. Combined, the two items also posted a multi low of $34 billion, less than the previous recent low from February 2009 when the first leg of the Greater Depression was allegedly at its zenith (see chart below). We can't wait to hear how the "recession is over" brigade will paint this particular data point.
On a rolling twelve month basis, the government has to plug an LTM hole of about $250 billion in annual tax withholdings. The LTM individual tax withholdings have dropped to an unprecedented low of $1.275 trillion, compared to the $1.43 trillion as of September 2008 when the recession was about to start. If the government is unable to resurrect tax withholdings to historical levels before the interest rate on the $7.9 tillion in marketable debt starts climbing (even as the $7.9 is set to become about $10 trillion in just over a year), call it a ballgame.
(9 votes)
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on Mon, 03/01/2010 - 22:37
#250584
Greece is over! Take me out to the ballgame!
on Mon, 03/01/2010 - 23:19
#250587
Also, aussies raise cash rate. The raising will continue, but way too slowly to catch inflation. at least some will try to get ahead of the pack.
on Mon, 03/01/2010 - 23:24
#250634
What will happen to the back of the pack? They will have to deal with the wrath of the artists that will assault their being. goodbye 'merica. here is one of the greatest MCs to ever grace the mic's view of 'merica. "Piss on the constitution, and burn the magna carta"
Pharoahe Monch - Book of Judges:
http://www.youtube.com/watch?v=_YGHFJCG9IM&feature=related
on Tue, 03/02/2010 - 07:11
#250819
50 cent finds the walrus?
on Mon, 03/01/2010 - 22:50
#250595
I wonder whether the decline is due to employment issues or whether people have just had enough and have decided that they aren't having anything withheld. I seem to recall some discussion previously about cutting off Uncle Sugar.
on Tue, 03/02/2010 - 11:24
#250857
Why not both? How can anyone continue to believe the Bureau of Making Stuff Up when it comes to unemployment numbers? It's ludicrous to think that things are getting better when most indicators not controlled directly or indirectly by the powers that be are trending back down or never turned up.
Considering inflation is also much higher than stated and raises are a thing of the past, simply because employers can point to inflation and "tough times" as their justification for no raise, people are going to add one of two more dependents on their withholding instructions to give them a little more cash flow. We'll deal with it next year when taxes are filed.
In fact, many people over withhold anyway because they like those big refund checks, using the government as a non-interest bearing savings account that pays out in Feb or March. Charities are also hurting, describing a situation where people are reducing or eliminating their automatic paycheck deductions for charity to provide even more cash flow. Many of my clients have done all of the above plus lowered or eliminated 401(k) contributions.
on Tue, 03/02/2010 - 11:26
#251041
I seldom withhold more than the tax authorities would like... and about 3 weeks ago, I got a nice mailing from the IRS that had payment vouchers for the 2009 AND 2010 tax years.
I think it's funny that (a) I can only roughly estimate what my tax liability in 2009 is going to be; and (b) I have no idea at all what to expect in 2010-- heck I might just be out of a job, if the SHTF.
Yet our wonderful U.S. Government wants me to prepay 14 months in advance. You can't make this stuff up.
on Wed, 03/03/2010 - 20:52
#253164
I'm in the same boat. But only for 2010. I don't like the government handouts (to corporations mostly but I don't like welfare either) so why do I want to pay in? I rather make them wait and suffer for their stupidity. And I don't care which party is in power. Two heads of the same beast. To say one is better then the other is like debating how to say tomato. Pointless.
on Tue, 03/02/2010 - 11:36
#251060
CD, use Orwell...it's the "Ministry of Truth."
on Mon, 03/01/2010 - 22:53
#250600
You don't need no stinking tax payments when you've got your own printing press.
Ain't that right, Bennie?
on Mon, 03/01/2010 - 23:07
#250612
Well, the shit is going to hit the fan. Tax revenues plunging. States going bankrupt. The Federal deficit exploding. Two choices: print more money, really fast, or some big states grind to a halt, and interest rates spike on Treasuries and MBS. Oh ya, and tax increases too. I don't see how how the Fed cannot renew being in the mortgage market, and I don't see how the Fed can't be in the Treasury market. And I don't see how the Feds don't bail out the states. It's mo' money all around. Probably need a good crisis to get this second dose of money printing tho. Stocks are in a for a good drubbing along the way.
on Mon, 03/01/2010 - 23:16
#250620
Agreed.
on Mon, 03/01/2010 - 23:19
#250623
All of the above marked. "print more money, really fast, or some big states grind to a halt, and interest rates spike on Treasuries and MBS. Oh ya, and tax increases too. I don't see how how the Fed cannot renew being in the mortgage market, and I don't see how the Fed can't be in the Treasury market. And I don't see how the Feds don't bail out the states. It's mo' money all around. Probably need a good crisis to get this second dose of money printing though." Inflation will help stocks look "good". Numbers can be decieving.
on Mon, 03/01/2010 - 23:23
#250631
The Fed is going to pump more money into the system, but they aren't going to tell YOU about it. They'll make up some new Treasury Department acronym, staff it with idiots, then run billions more through the new "SMD" program to perpetuate the perception that everything is a.o.k.
Interest rates stay low. equity prices stay high. Sheeple see their 401K's approaching 301K levels, and the current administration gets to keep the majority when November elections roll around.
Then wait for the true looting to begin.
on Wed, 03/03/2010 - 15:40
#252769
Anonymous, you are right on!
on Tue, 03/02/2010 - 06:44
#250816
Why would stocks be hammered? The decision to print is what fuled the market's rise from the March 2009 low. If anything, the continuation of QE will signal "time to buy risk assets" and the stock market will rise. At least, that is the lesson post-March 2009.
And I would take Ben at his "word," if that means anything. They will stop MBS purchases (accomplished solely by printing more FRNs) and there at least will be a pause in any overt purchases of Treasury debt. The covert purchases to make sure there are no auction fails (not that I believe at this time such a thing is a threat) and to make sure rates do not go sky-high (definitely a factor) will be there.
on Tue, 03/02/2010 - 09:00
#250867
Inflation is good for stocks only for a limited time as quantitative easing carries the illusions of more real money moving around. Earnings go up, social mood lifts P/E ratios and stock markets take off ... the disruptions caused by high inflationary environments (exchange rate uncertainty, real growth uncertainty, future tax liabilities, ...) eventually will depress P/E ratios, cause lower consumer spending and, thus, stall earnings growth.
Look at what stocks did in the 1970s during high inflation. Not a pretty picture.
on Tue, 03/02/2010 - 11:41
#251067
That's actually a very good question, Ned.
My only response to that is that continued QE will eventually have an impact on commodity inflation. Once the sheeple see gasoline hit 5 bucks a gallon on their declining income levels, it may start to hit home that something has gone astray. Already weak demand will get weaker. And if wages miraculously increase in line with underlying inflation, the bond vigilantes will be out on the long end of the curve in a very significant way, pushing up yields.
We got a nice window for QE to work on risk assets in 2009 when the world felt like it was coming to an end. The weird thing is that we are still literally deep in the hole that was created in 2008-- the only difference is that risk assets are almost twice as high.
As for MBS purchases, perhaps the Fed sees the need to end the purchase program now for primarily the reason you indicate-- with Treasury bond issuance ramping up to fund the growing deficit and roll in maturities-- most of the Fed's efforts will be centered in "providing liquidity" during times when the Treasury auctions are most at risk.
Of course these stick saves by the Fed amount to cheating... but when has that ever stopped Uncle Ben and Turbo Timmy?
on Tue, 03/02/2010 - 08:01
#250836
They either print more now, to stop yields going up or they print more later to pay the interest on the debt.
I am sure they go for the former option, as it will help to push the markets higher and boost the illusion of wealth, which is all the Fed can really do.
on Tue, 03/02/2010 - 11:44
#251075
I agree...this argument revolves around the notion of the deflationists like Douchinger that the governments will implement austerity.
Of course he says we can't "devalue" and everyone is fucked worse because we are the reserve currency.
Yes, there's an inherent contradiction. We don't HAVE to implement nominal austerity *because* we can print the reserve currency. Nobody is going to impose austerity on us like with Greece. The only way that can happen is total FRN collapse with replacement by another reserve or if we have to start sourcing FX'd debt.
You couple that with a totally consequence-free deficit mentality in DC. They are programmed to spend money they do not have.
I see no possibility for austerity measures here except if our currency is replaced. Congress will not and cannot implement austerity because Congress is pathologically dysfunctional. And, what about austerity? Fuck it! They held up billions for UE extension and the wars cost what?
Austerity is all about sticking the masses with the bill for the ELITES' running up of the gov'ts' tab with their BRIBED political leaders! The elites made out like kings during this debt wave...we are the Bamboo Lounge writ large.
The Fed HAS to know by now that credit growth is done and cannot be revived. There are two courses here, dramatic contraction of gov't at ALL levels, which employs what half the goddamned country, or to start unsterilized injections of cash.
The productive sector is crumbling under the weight of the burdens imposed by the public sector - they're suffocating the life out of it like a Haitian building.
on Mon, 03/01/2010 - 23:08
#250614
NIce Post.
on Mon, 03/01/2010 - 23:38
#250647
Mr. Lennon - Inflation ? what world do you live in Sir ? Have you looked at the CPI and wages lately ? Of course interest rates could be determined independent of whether we are deflating or inflating simply because of too much treasury supply !!
on Tue, 03/02/2010 - 07:20
#250822
Mr. Anon - I will tell you what world I live in.
Made a trip to WalMart for necessities....$65.00 for 2 bags of nothing....
But I guess that it's all MY fault because I didn't purchase a 156 inch lcd tv that is officially on the CPI....
But who knows...perhaps with the right seasonings and steak sauce that t.v. might actually taste good.......
on Tue, 03/02/2010 - 10:01
#250915
That's right---look at the price of cereal and milk. They go up while consumer electronics go down. Meanwhile, we're told the CPI is down so there'll be no COLA for Social Security recipients this year.
on Mon, 03/01/2010 - 23:39
#250649
Weimar or Bust. Yes, $10 trillion at 7% would bring debt service to over 50% of withholding. Surely that is a Gave Over scenario, one of many routes to Wheelbarrow City. Henry C.K. Liu, among others, has been arguing for years now that only real wealth built on work can get us out of a debt-clogged collapse, but The Bernank & Co. are having none of that. How many mountains of debt can they balance on the mole hill of tax revenue?
on Tue, 03/02/2010 - 00:51
#250694
Not to worry ... they won't be able to sell enough Treasuries after a couple of failed auctions anyway
on Tue, 03/02/2010 - 11:45
#251076
Are you kidding me? With the Federal Reserve around creating money, there WILL NOT BE A FAILED AUCTION.
The only thing risking a failed auction would be (a) a massive run on dollar devaluation; and/or (b) Ben Bernanke and friends get caught asleep at the wheel.
Neither scenario is likely over the next several months.
We have Europe to partially thank for that.
on Mon, 03/01/2010 - 23:41
#250650
Very pertinent article. Danke Schoen Herr Durden !!
on Mon, 03/01/2010 - 23:44
#250652
Bunning is really gunning !!
on Mon, 03/01/2010 - 23:45
#250653
As to the "recession is over" brigade. Bernanke has already blamed the snow storms.
I'd have fell out of my chair if I could still afford one.
on Tue, 03/02/2010 - 01:04
#250706
That is why Iceland went bankrupt. It was the weather last year. It must have been very cold.
on Mon, 03/01/2010 - 23:53
#250655
Looks like we're all set for S&P 5000!
on Mon, 03/01/2010 - 23:57
#250656
http://www.amazon.com/Dow-36-000-Strategy-Profiting/dp/0609806998
on Tue, 03/02/2010 - 00:47
#250693
Dow 36,000 ... you can buy for $0.95 on Amazon ... thanks for the tip
on Tue, 03/02/2010 - 00:53
#250695
Apparently there's a "collectible" one for $5... it includes the author's tears.
on Tue, 03/02/2010 - 00:55
#250698
Money Laundering 101 ...
Step 1 - Print money ...
Step 2 - Buy Securities ...
Step 3 - Leverage Securities ...
Step 4 - Borrow more money with Leveraged Securities as collateral ...
Step 5 - Default ...
Step 6 - Start Over
on Tue, 03/02/2010 - 10:28
#250947
You forgot Step 4.5 - Pay yourself dividend with proceeds of borrowing
on Tue, 03/02/2010 - 03:29
#250760
For something it's called S&P 500, don't you think?
on Mon, 03/01/2010 - 23:58
#250657
What you learned in history about a depression "just happened" is incredibly untrue. Things grew worse and worse, in spite of the government denying it. Eventually people realized that they were in a shit storm, and had always been a shit storm.
So what to do? Get out of debt. Stock up on things you might need in a disaster. If there is a bank holiday, you still have to eat.
on Tue, 03/02/2010 - 02:01
#250734
Get out of debt?!? You MUST BE Joking!
MAX EVERYTHING to the HILT, then default, just like our government is doing.
He who plays by the traditional rules, while everyone else is breaking them, ends up WORST OFF.
Don't be a fool.
on Tue, 03/02/2010 - 11:46
#251078
I gotta agree with this. Max it out and walk.
Buy gold with it and then you can give it to a banker to give you a credit card with a whopping 75% of the value of the gold as a credit line!!!!!!!!!
on Tue, 03/02/2010 - 00:12
#250667
Bunning is short big time and probably very upset it wont go down.
on Tue, 03/02/2010 - 00:18
#250673
We should be getting a teleprompter recording from our community organizer about how its our patriotic duty to pay our taxes any day now... or Benny's gonna take away the cookie jar and there'll be no QE2 for you.
on Tue, 03/02/2010 - 00:24
#250677
This doesn't mesh with the report a few days ago showing incomes rising slightly.
One of them has to be wrong and I'm guessing its not this one
on Tue, 03/02/2010 - 08:55
#250861
incomes rise slightly while there are far fewer people working. no inconsistency.
on Tue, 03/02/2010 - 00:34
#250683
The federal tax withheld from paychecks is even worse than the numbers reveal. For 2010, the feds have raised witholdings from paychecks, even though taxes have not gone up. The effect is to give the feds an interest free loan. The feds will pay the money back you file your tax return in 2011.
So, even though the feds are witholding more than ever from paychecks, the amount of tax withheld is still going down.
Exit question: How did consumer spending go up in February while tax witholdings went down? The drop in tax witholdings indicates that consumers had less income, yet their spending increased. Did consumers really spend more, or is the spending data wrong?
on Tue, 03/02/2010 - 00:56
#250700
To even make it more ingenious, they either:
1) pay your 2011 refunds with IOU's or vouchers, or
2) they're planning for a future tax hike - harder to notice when you're already paying it.
on Tue, 03/02/2010 - 04:22
#250776
1040 A 2011
[ ] Check this box to have your refund deposited with TreasuryDirect
[ ] Check this box to have your refund pay down your mortgage
[ ] Check this box to apply your refund towards a new GM vehicle (free car wax kit included while supplies last)
on Tue, 03/02/2010 - 06:38
#250815
[] Check this box to have your refund pay down you neighbor's mortgage
on Tue, 03/02/2010 - 01:06
#250707
The drop in witholdings doesn't mean anything more than that -- a drop in witholdings. Perhaps it was due to less income. Perhaps it was due to less witholdings. Perhaps everyone works cash only jobs as prostitutes or meth dealers in a black market economy. Whatever the reason, to say it is A or B is not accurate. Consumer spend went up maybe because consumers paid less in taxes. Maybe not. Maybe they're not related. There is no meaning in the soup. Just data.
on Tue, 03/02/2010 - 01:46
#250732
The drop in your bank balance doesnt mean more than that.... its just data... perhaps you spent more on meth this month, perhaps it was hookers...
there is no meaning, just data
forget about thinking with your brain
on Tue, 03/02/2010 - 04:43
#250779
Consumer spending did not go up.
Same store sales went up...but that only measures survivors. There are fewer stores and all those consumer spending numbers depend on stats and sampling.
If you want to estimate consumer spending you have to consider sales tax. It's down. A lot.
on Tue, 03/02/2010 - 09:12
#250877
Count me in the camp of those who trust the real-time tax withholding data, not the bogus, massaged BLS estimates. See this article for a plausible explanation:
http://globaleconomicanalysis.blogspot.com/2010/02/retail-sales-rise-where-lets-take-look.html
Denninger also has explained this phenomenon along similar lines.
on Tue, 03/02/2010 - 00:46
#250692
Deficit spending will continue until tax collections improve. After that tax rates will be increased until tax collections improve further. This is not your grandfather's Keynes.
on Tue, 03/02/2010 - 01:13
#250711
Hmmm, let's see, savings and money market accounts earn zero interest, the tax income on zero interest is zero, so how is ZIRP working out anyway?
on Tue, 03/02/2010 - 08:49
#250855
Bernanke/Euro Depression Playbook
Step 1: Provide cheap money until that doesn't work
Step 2: Provide free money until that doesn't work
Step 3: Print lots of money until that doesn't work
Step 4: Siphon money by instituting VAT (in U.S.) and selling 'Hope' bonds until that doesn't work
Step 5: Confiscate money from pensions, 401k accounts, piggy banks and mattresses
Step 6: Fabricate disaster of biblical proportion (hope I'm wrong on this one)
on Tue, 03/02/2010 - 01:16
#250712
let's see them try to spin this shit into peanut butter and jelly.
on Tue, 03/02/2010 - 01:16
#250713
Deficit to Revenue not so good eh?
on Tue, 03/02/2010 - 02:10
#250742
.
Things That Scare Me
http://www.youtube.com/watch?v=EBLI9jq6tUY
Fluorescent lights engage
Blackbirds frying on a wire
Same birds that followed me to school When I was young
Were they trying to tell me something?
Were they telling me to run?
The hammer clicks in place
The world's gonna pay
Right down in the face of God and his saints
Claim your soul's not for sale?
I'm a dying breed who still believes
Haunted by American dreams
Haunted by American dreams
.
on Tue, 03/02/2010 - 02:30
#250747
Are we at the point yet when the government just says 'Fuck it' and prints totally made up lies and prints tons of money and sends it out and crosses their fingers and hope nobody notices?
on Tue, 03/02/2010 - 11:38
#251062
Hasn't this already happened?
on Tue, 03/02/2010 - 03:16
#250757
There is absolutely NO connection between tax revenues and budget deficits! Reduction in tax receipts is a "savings" and therefore shows that the "economy is growing" and that the deficit will come down from "growth in GDP".
I am getting sick again.......
on Tue, 03/02/2010 - 03:32
#250762
While all the time I was inclined to believe that the FED will keep on printing, I am having second thoughts. Reasoning:Obviously that most freqeuent visitors who come here believe that the FEd is in the business of protecting the banks. Now if this is true,wouldn't also hold true that by printing,eventually the FEd is turning trillions of bank loans into a much less value when hyperinflation kicks in?so where is the benefit of such operations as quantitative easing and such(beyond the last year operation which was basically conducted to prop up the market?. I need a reasoning that shows me that banks will benefit from hyperinflation to believe that the FED might continue printing. And just may be, BB was honest when he said that he is not going to monetize the debt. Any taker for the other side of that argument?
on Tue, 03/02/2010 - 12:05
#251113
Hey anony, good catch; glad to see some people are starting to 'get it'. Deflation is the end game if you've had a chance to get out at the top. Once you're safely in gold/cash, all you have to do is wait a few months/years to pick up desirable assets at 90% off the current price.
Hyper-inflation and/or jubilee allows debt slaves to get off scot-free. If the PTB thought the Fed was going to inflate away the debt, how come they're not leveraging the shit out of the $trillion(s) in excess reserves? How come Dimon isn't personally committing to buying every highly-leverageable asset he can get his hands on with as much debt as possible if he thought Ben would accommodate him by revaluing his debt to -0-?
Deflation is coming - all the cards are in place. Jan 19, 2010 marked the high water point of this administration. If health care fails (speaking strictly from a political influence perspective), then the timing for a switch to a mood of fiscal restraint will accelerate. After Nov, we could even see a movement to actually balance the budget.
These trends are all hugely deflationary. People who think Ben is just going to print willy-nilly are failing to read the political "tea" leaves.
on Tue, 03/02/2010 - 12:22
#251135
Interesting perspective. I do find it interesting that banks are behaving the way they are with their excess reserves. Jamie could literally lever these things to high heaven and play the casino. Yet, by all appearances, many of these same banks appear to be satisfied by holding Treasuries.
It's as if many banks are just waiting for the next hit to their balance sheets to occur. Indeed, that may have been the underlying message to the banks as QE-driven reflation drove risk assets to higher levels.
Time will tell.
on Tue, 03/02/2010 - 15:47
#251473
Complete horseshit.
The biggest debtors ARE THE BANKS and the governments!
They haven't leveraged the trillions? Seriously?
I got news for you, man - they are ALREADY leveraged to the goddamned MOON. That is why the mild deflation of 2008 nearly put every single one of them out of business. The banks are INSOLVENT.
Fiscal restraint??? Not from where I sit.
Deflation would collapse the USG. We cannot pay the coupon or roll our debt without monetization. Let an actual auction fail and SEE what happens to the value of the dollar
on Wed, 03/03/2010 - 08:18
#252118
Perhaps the recent feast has been so rich, they're playing it cool.
Perhaps they're afraid for their lives.
I find it interesting that the effects of paper world robbery haven't yet generated significant backlash in the physical world, but the festivities are just beginning.
I'd like to see an investigative report on the security maneuvers of the elites, if such a thing could even be investigated. Are they moving families offshore? Are they hardening residences? Retaining additional security services?
on Tue, 03/02/2010 - 15:43
#251461
This is an easy one.
Deflation kills the leveraged.
Who is more leveraged than banks?
The banks nearly all went tits up in 2008 during a relatively mild deflation.
Inflation has HELPED the banks...think about that. Have the rich gotten richer? Have the banks taken over more of the economy? Think about it...since 1971. This is the deflationist mantra, that creditors don't want deflation. What do they want, defaults? We've had unabated inflation since 1913 and how have the elites and banks done? Inflation is good for them. They make far more money off of it than they lose in "dilution" of their lendings. Lending is not how banks make money, they make it by BORROWING.
There isn't a bank or government out there that can survive the type of deflation that tools like Douchinger predict. The math of debt-based money makes deflation a self-reinforcing, implosive spiral.
on Tue, 03/02/2010 - 06:37
#250814
There is going to be a lot of auditing this yr.. Everybody must be conspiring against the I.R.S. now that the recession is over.
on Tue, 03/02/2010 - 06:50
#250818
F-TV will not stop with the "improving conditions and recession over" mantra. It has to be from big brother, no one can be that stupid to believe all is well. Really piss poor journalism, they have to be bought off.
on Tue, 03/02/2010 - 07:52
#250830
February 2009 had an extra day in it. It also had one more work day (vs weekend). This weird seasonal accounts for some of the tax shortfall. Possibly $2b. So we are $6b light YoY. A year ago we were 7% unemployed, today 10%, so the drop makes sense.
The economy blows. We are not generating jobs or sufficient taxable income. The deficit is going to explode from the current projection of 1.6T. We are now looking at 1.8T. What's another $200b amongst friends.....POS.....
on Tue, 03/02/2010 - 07:54
#250831
That graph is racist!
on Tue, 03/02/2010 - 07:58
#250832
the news may be bad but they are going to try to gun the spx......looks like a nice bull trap.......the tanking is going to be fun to watch when everyone says "but, but, but the analysts said the market was going up! the gov't said the recession is over"
people who fail to pay attention to history................you know the rest.
on Tue, 03/02/2010 - 08:19
#250845
It will be interesting as to how the bought and paid for rating agencies will account for this....
My friends....
Here it is....
Time to hit the reset button....
Raising taxes will actually lower taxes....
There should be two focal points....
1) Dramatically reducing the size of govt....
2) A total tax restructuring.....elimination of individual and corporate income taxes.....to be replaced by a sole 15% consumption tax....
Then comes the good part....
Of the 15% tax take....The local townships state by state will vote on how to spend the 15% via the internet....
No more lobbyists....
No more debt....
on Tue, 03/02/2010 - 09:10
#250872
I think the next couple of months will be worse as people file their 2009 Tax Returns and find out they are owed a refund.
If you adjusted your witholding in 09 based on a bonus and wage increase in 08, then said bonus and wage increase did not repeat itself in 09. Uh oh.
I suspect Uncle Sam (err, Timmah...er Ben) will be writing some checks.
Plus, for all the First Time Homebuyers and Move Up Homebuyers, hard to adjust witholding for points paid on a real estate transaction.
on Tue, 03/02/2010 - 11:27
#251043
Don't forget the " MAKING WORK PAY " ( Schedule M ) credit nestled into the 1040 for the 2009 filing period. It's $ 800 for married and $ 400 for single. That's a TAX CREDIT, not a deduction.
Most people didn't adjust witholdings for it, so their refunds will be bigger. Also, interest income tax is virtually nothing for many filers versus '08.
The "net of refunds receipts" to Uncle Sugar will continue to be lean.
on Tue, 03/02/2010 - 09:29
#250889
I don't know if I'm at all typical, but here's why my withholdings have dropped by well over 50%.
I'm self-employed; an LLC. I pay in estimated quarterlies and reconcile in April (right now, actually). 2008 was my busiest year ever, until November when everything shut off like a light switch. In 3 weeks all my repeat business for 2009 cancelled (about 75% of what I had on the calendar). I worked my connections hard and took everything I could get so 2009 came in at about 50% of 2008 in the end. I can support my family on that. I'd rather have more, but as I see people losing their houses I can't complain too much.
I ran dry runs of 2009 tax filings each time a quarterly payment came up so I should be pretty close to dead-on. In years past, cash was flush enough I just paid in based on generous projections and rolled the refund over to the next year's liability. Cash flow was too tight to do that this year.
Taking my 50% hit lowered my income so once all my deductions kick in I have very low taxable income; probably 25% of what I had in 2008. Hence, big decline in revenue coming in from li'l ol' me.
So far, 2010 isn't looking much better.
Right now I'm long gardening implements. For food, fun, good veggies, and something to do since I won't be doing tons of work for money.
on Tue, 03/02/2010 - 12:28
#251148
Funny, republicans like Laugher have been claiming for years that tax rates determine government revenue. You know, lower tax rates and the increased business activity would cause the additional revenue to swallow the pithy tax break outlay. And, you never raise taxes, because that always caused activity to slow, which in turn brings in less revenue via the I.R.S.. Seems these numbers dispute that given there has been no tax increase. I'm sure all you super smart ZH's could explain why decreasing taxes will "grow" us out of this little problem, and how raising taxes will actually kill what little withholdings are still coming in to the IRS? Takers? Should be fun.
on Wed, 03/03/2010 - 18:08
#252975
First off, it's "Laffer" curve, not "Laugher."
And what he said was if there's a 1% tax rate, obviously the govt doesn't get much money. If there's a 99% tax rate, people say fuck it and either work the bare minimum or cheat on their taxes. So if you cut taxes from 90% to 40%, people are more worried about jail and more willing to let Uncle Sam have his. This was Reaganomics.
Today, if you have a much shittier job than you had 3 years ago, and the Fed Govt bumps your taxes 50%, you think people won't look for ways to get paid under the table? That's why Greece just outlawed cash transactions over $1,500. Won't do any good since people will put food on their table before they give it to the govt. Will happen in Greece; will happen here too.
on Thu, 03/04/2010 - 11:32
#253656
First off, Laugher was a little pun, sorry it was lost on you. I know what the dumbass said, but thanks for your take on his "curve". So, are you claiming Reagan lowered taxes from 90 to 40, and that people only pay tax when they think jail is the alternative? I pay mine because I'm proud to live in a country that was great (until it went backrupt because Laughter and half the population will stop at nothing to avoid ANY TAX)and PAY MY FAIR share of it's expenses. But, I would like them to spend less "protecting" the small-minded folks who are so afraid that "evil doers" are coming to get'em, and more on making people healthy and educated. Finally, are you trying to argue that someone with a "shittier" job (by which, I assume you mean pays less) had the Fed bumb their taxes 50%? Please give one example, as that was the point of my post. Taxes have not gone up, yet the Fed's take is way down, which as I claim puts to waste Laugher, Reaganomics, Trickle Down, and the self admitted completely wrong model Greenspan and all his idiot followers, current Fed Head included. Until these people and the Chicago Business School group think are gone, this country will go down.
on Tue, 03/09/2010 - 12:46
#259264
The main point, the plain historical truth that John Kennedy and Regan proved is that if you cut taxes, revenue to the government goes up (of course can't eliminate taxes, but you get the gist of my point), because more money moves around and thus people have more income to report. After that the problem, at least when Regan was president, was that congress said, oh boy, look at all this money, let's just spend it (and more) instead of paying down any deficit.
on Tue, 03/02/2010 - 14:06
#251305
What does LTM Mean?
on Wed, 03/03/2010 - 18:07
#252972
TO:Anonymous
on Tue, 03/02/2010 - 12:28
#251148
First off, it's "Laffer" curve, not "Laugher."
And what he said was if there's a 1% tax rate, obviously the govt doesn't get much money. If there's a 99% tax rate, people say fuck it and either work the bare minimum or cheat on their taxes. So if you cut taxes from 90% to 40%, people are more worried about jail and more willing to let Uncle Sam have his. This was Reaganomics.
Today, if you have a much shittier job than you had 3 years ago, and the Fed Govt bumps your taxes 50%, you think people won't look for ways to get paid under the table? That's why Greece just outlawed cash transactions over $1,500. Won't do any good since people will put food on their table before they give it to the govt. Will happen in Greece; will happen here too.
on Wed, 03/03/2010 - 18:08
#252974
First off, it's "Laffer" curve, not "Laugher."
And what he said was if there's a 1% tax rate, obviously the govt doesn't get much money. If there's a 99% tax rate, people say fuck it and either work the bare minimum or cheat on their taxes. So if you cut taxes from 90% to 40%, people are more worried about jail and more willing to let Uncle Sam have his. This was Reaganomics.
Today, if you have a much shittier job than you had 3 years ago, and the Fed Govt bumps your taxes 50%, you think people won't look for ways to get paid under the table? That's why Greece just outlawed cash transactions over $1,500. Won't do any good since people will put food on their table before they give it to the govt. Will happen in Greece; will happen here too.
on Wed, 03/03/2010 - 23:09
#253267
Consumer spending was reported up because the Census Bureau used a survey of existed retail outlets and did not account for retailers going bankrupt and remaining retailers closing stores last year, sending their customers to stores remaining open. Ergo a slight increase in per store retail sales, thus Census Bureau reports slight increase in per store sales, but not actual aggregate sales
However sales tax revenues which have a 99% correlation with aggregate retail sales are down well over 6% year over year nationally. In several states sales tax revenues are down in the 15% range. Number that is consistent with decreased withholding tax revenues.
There will be no hyperinflation. Debt as the aggregate monetary measures like M3 and money velocity measures show is declining at a historically rapid pace.
The banks will be shut down for sure as has happened in all previous depressions. Have some cash. The banks will limit withdrawals to $500 or a $1000 a week for probably 6-12 weeks or more.
Above all, no gold. It is an extremely overpriced electrical conductor. Have food, medical necessities, a full tank of gas, etc. Cash = greenbacks will be king and there will be some real bargains for the alert.
We are going to squeeze the bad debt out of the system like it or not.
Just remember, only a great wild herd of suckers could have ever let their own governments screw them like this. A good wake up the suckers skinning will wind up sending a lot of crooked politicians and corporate CEOs to jail where they belong. Ah the benefits of a "close the barn door after the horse is in the dog food can" citizenry.
A good thing this skinning is on video, lets hope our grandkids watch and learn from this record.
on Fri, 04/16/2010 - 09:24
#303834
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