Working Poor Will Pay More After Obama’s GOP Tax Compromise – DailyFinance
When President Obama defended his tax cut compromise with the Republican Party, he insisted that he was helping working people avoid taking a pay cut. "I’m focused on making sure that tens of millions of hardworking Americans are not seeing their paychecks shrink on Jan. 1, just because the folks here in Washington are busy trying to score political points," Obama said. But as tax experts look at the proposal more closely, it has become clear that the working poor will actually end up losing money under the new arrangement. "Single working people with earnings below $20,000 and married couples with earnings below $40,000 are worse off under the payroll tax cut proposals in the compromise between the president and the Republicans," Here’s why: The Obama proposal substitutes a Social Security payroll tax cut for the Making Work Pay credit, which was targeted to do the most good for low-income families. Under current rules, the working poor receive $400 when they earn at least $6,452 a year through the Making Work Pay credit. Married couples with earnings above $12,900 get $800 under the program.