For the rest of this week, AllBusiness is doing special coverage of the Obama Administration’s impact on business and finance so far. One of the things Obama promised while campaigning was that he would take measures to help the middle class. As a result, one of the first things that happened while he was in office was the Making Work Pay tax credit.
This tax credit was mostly administered through work pay checks. The credit was up to $400 per person and $800 per couple. For those with 9-5 jobs, that meant a small increase in take home pay. For the self-employed, it means that this credit needs to be claimed on the 2009 taxes you file this year (April 15 approaches). Double check your paychecks and withholding, to see if you still have this tax credit coming to you.
While the Making Work Pay Tax Credit was undoubtedly a nice touch, the fact of the matter is that most Americans probably would have preferred a lump sum (like the stimulus payments in 2008) to it being parceled out. The reasoning was that having it spread out, manifesting in each paycheck, would help keep things a little more steady. Unfortunately, the reality was that many people didn’t even register the money. For a couple paid twice a month, it worked out to between $25 and $35 a pay period. For some, that small amount, likely wasn’t even noticed.
I wasn’t a big fan of the first stimulus payment back in 2008. It only seemed to reinforce our consumer culture. So, from that standpoint, a gradual tax credit, I thought, was an improvement. It was about providing breathing space, and not outright consumerism. However, Obama has done little of real significance to check our reliance on consumer debt spending as an economic driver. While, in my opinion, there are some good things Obama has done since taking office, he has done little to try and wean us away from the idea that debt-fueled consumerism should account for 2/3 of our economic activity. (And we still have a problem with thinking long term.) And this maintenance of the status quo is exactly while we will see successively worse crashes as our economic system remains largely unstable.