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White House Considers Delaying Tax Withholdings to Bully Republicans

December 10, 2012
William Bigelow

Source …..

empty-walletPretend you’re Barack Obama. Put on your crown and think hard. If the Republicans hold fast on taxes and the country goes over the fiscal cliff, the Bush tax cuts will expire and the middle class will get clobbered. How do you avoid being held responsible?

Easy. You simply have Treasury Secretary Tim Geithner adjust the withholding tables so that taxpayers don’t get hit as hard in their paychecks, and if you’re really determined to hold the feet of the wealthy 2% to the fire, leave their withholding alone.

This idea is being floated now. Bill Hoagland, senior vice president at the Bipartisan Policy Center, explained, “If we were to, say, go over the cliff and the rates go up, he could modify those withholding tables such that the average employee out there would not effectively see any more or less taken out of his paycheck.”

As Treasury Secretary, Geithner is responsible for setting withholding tables “most appropriate” in implementing tax law. Joseph Minarek, senior vice president and director of research at the Committee for Economic Development, said that Obama could use Geithner’s power as leverage in forcing Republicans to come to a deal on the fiscal cliff.

But Minarek also warned that the idea was risky:

If you want to go down this route, you had better be pretty sure that, at the end of the day, you know what the outcome is going to be. If you guess wrong and taxpayers have to write checks next April…they’re not going to be happy.

But Democrats are insinuating that Geithner may go ahead. Obama lackey Sen. Chuck Schumer (N.Y.), said he hoped the fiscal cliff negotiations would be resolved before January so the withholding plan wouldn’t be needed.

Of course, if Geithner does go ahead and use withholding to do what Obama wants done, the tax bill later on in 2013 will be higher.

But the Obama Administration knows that if the fiscal cliff is hit, other taxes, such as the alternative minimum tax, the estate tax and taxes on capital gains and dividends will rise precipitously, so they are considering the withholding plan as a way to fool the middle-class long enough so they forget who was responsible for raising their taxes.

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