Congress wants automatic wage deductions to pay down the national debt (non tax-deductible)

[stockholmer]

http://www.sovereignman.com/expat/congress-wants-automatic-wage-deductions-to-pay-down-the-debt-HR-2411

snip

HR 2411 states that every worker in America should be able to voluntarily have a portion of his/her wages automatically withheld and sent directly to the Treasury Department for the purposes of paying down the federal debt. “Every employer making payment of wages shall deduct and withhold upon such wages any amounts so elected, and shall pay such amounts over to the Secretary of the Treasury…”


snip

So let’s say there are millions of sheep out there who elect to donate a portion of their toil and sweat so that the Chinese and big financial institutions don’t have to worry about an American default. How does Congress plan on rewarding its most patriotic citizens? By sticking it to them on their taxes, of course.

HR 2411 stipulates that any contribution made to the Treasury in order to pay down the federal debt IS NOT TAX DEDUCTIBLE. “The Secretary shall include. . . a reasonably conspicuous statement that any amounts deducted and withheld from wages. . . are not deductible as charitable contributions for Federal income tax purposes.”

Imagine this scenario: You make $100,000/year. In a fit of complete insanity, you decide that you want to withhold your entire annual salary to pay down the debt. Hey, you can always move in with mom for the next year, right? Well guess what– Uncle Sam will gladly take your money… and then STILL expect you to pay taxes on the $100,000 that you earned, so you’d have to come out of pocket with an additional $40,000 or so.


snip


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the actual bill

http://thomas.loc.gov/cgi-bin/query/z?c112:h2411:

H. R. 2411

112th CONGRESS


1st Session



H. R. 2411

To provide for an employee election on Form W-4 to have amounts deducted and withheld from wages to be used to reduce the public debt.



IN THE HOUSE OF REPRESENTATIVES



July 6, 2011

Mr. CRAWFORD (for himself, Mr. TIBERI, Mr. FINCHER, Mr. LANDRY, Mr. DENHAM, Mr. DOLD, Mr. FLORES, Mr. GRIFFIN of Arkansas, Mr. AUSTIN SCOTT of Georgia, Mr. HUIZENGA of Michigan, Mr. PALAZZO, and Mr. GUINTA) introduced the following bill; which was referred to the Committee on Ways and Means

--------------------------------------------------------------------------------



A BILL

To provide for an employee election on Form W-4 to have amounts deducted and withheld from wages to be used to reduce the public debt.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Reduce America's Debt Now Act of 2011'.

SEC. 2. VOLUNTARY WITHHOLDING FROM PAYROLL FOR REDUCTION OF THE PUBLIC DEBT.

(a) In General- An employee may elect for an employer to deduct and withhold upon the payment of wages by such employer amounts to be used to reduce the public debt.
(b) Requirement of Withholding- Every employer making payment of wages shall deduct and withhold upon such wages any amounts so elected, and shall pay such amounts over to the Secretary of the Treasury at such times and in such manner as the Secretary shall by regulation prescribe.
(c) Transfers to Account To Reduce Public Debt- The Secretary shall, not less frequently than monthly, transfer to the special account established by section 3113(d) of title 31, United States Code, amounts equal to the amounts paid over under subsection (b).
(d) Definitions and Special Rules- For purposes of this section--
(1) WAGES, EMPLOYEE, ETC- The terms `wages', `employee', and `employer' shall have the respective meanings given such terms under section 3401(a) of the Internal Revenue Code of 1986.
(2) AMOUNTS NOT DEDUCTIBLE- Notwithstanding section 170(c)(1) of such Code, no deduction shall be allowed for any amount deducted and withheld from wages under subsection (a).
(3) ELECTION TO BE INCLUDED ON WITHHOLDING EXEMPTION CERTIFICATE- Not later December 31, 2011, the Secretary of the Treasury shall modify withholding exemption certificates (described in section 3402(f)(2) of such Code) to include the election under subsection (a). The Secretary shall include on such certificates a reasonably conspicuous statement that any amounts deducted and withheld from wages under subsection (a) are not deductible as charitable contributions for Federal income tax purposes.
(e) Effective Date- This section shall apply to remuneration paid after December 31, 2011.

SEC. 3. EXCLUSION OF PUBLIC DEBT WITHHOLDING FROM WAGES.

(a) Social Security Taxes-
(1) AMENDMENT TO 1986 CODE- Subsection (a) of section 3121 of the Internal Revenue Code of 1986 is amended by striking `or' at the end of paragraph (22), by striking the period at the end of paragraph (23) and inserting `; or', and by inserting after paragraph (23) the following new paragraph:
`(24) any amount deducted and withheld pursuant to an election under section 2 of the Reduce America's Debt Now Act of 2011.'.
(2) AMENDMENT TO SOCIAL SECURITY ACT- Section 209(a) of the Social Security Act is amended by striking `or' at the end of paragraph (19), by striking the period at the end of paragraph (20) and inserting `; or', and by inserting after paragraph (20) the following new paragraph:
`(21) Any amount deducted and withheld pursuant to an election under section 2 of the Reduce America's Debt Now Act of 2011.'.
(b) Unemployment Taxes- Subsection (b) of section 3306 of the Internal Revenue Code of 1986 is amended by striking `or' at the end of paragraph (19), by striking the period at the end of paragraph (20) and inserting `; or', and by inserting after paragraph (20) the following new paragraph:
`(21) any amount deducted and withheld pursuant to an election under section 2 of the Reduce America's Debt Now Act of 2011.'.
(c) Wage Withholding- Subsection (a) of section 3401 of such Code is amended by striking `or' at the end of paragraph (22), by striking the period at the end of paragraph (23) and inserting `; or', and by inserting after paragraph (23) the following new paragraph:
`(24) any amount deducted and withheld pursuant to an election under section 2 of the Reduce America's Debt Now Act of 2011.'.
(d) Effective Date- The amendments made by this section shall apply to remuneration made after December 31, 2011.

[n2doc]

1. Key word "Voluntarily"

I have no problem with this. No one will ever use it, though. So it is just a waste of time.

[hfojvt]

9. I already did it

but I did it as a zero percent loan, which should have helped some. Any taxpayer can do it. Instead of getting a refund, you apply the refund to next year's taxes. I figured it was better than having the government borrow $600 from China so they could send me a check which I would put in my savings account and earn a whole .5% interest.

But I called the loan after Obama caved on the Bush tax cuts.

$600 of course makes almost no difference, but if 10,000,000 people did it it would be $6 billion. Still a very small drop in a very large bucket, but every little bit helps. If the government is borrowing money at 1% they would save $60 million in interest charges.

[Davis_X_Machina]

2. We have it already...

...we have payroll withholding for Federal income tax, a non-negligible part of which revenue stream goes to servicing the federal debt.

Grandstanding. Pure and simple. Anyone wants to do more, raise the income tax rates. And there's already a lovely section on the 1040 where you can make a voluntary, ex gratia additional payment to the Bureau of the Public Debt.

[asjr]

8. Evidently those guys who came

up with this do not know where they are. Would-be reps and senators should be required to read our history and constitution and IRS forms before running.

[Davis_X_Machina]

11. If they did their own taxes...

...they'd have seen all this information -- what % goes to debt service, where to send the ex gratia payments, etc -- in the instruction booklet that goes with the 1040.

[brooklynite]

3. This is misleading...

CONGRESS does not want this; 10 members of Congress have proposed this. My sense is that this is purely posturing.

[Autumn]

4. That's a politician for you

run up the credit card bill with war and more wars and their pet projects and dip into a persons pay check to foot the bill. How was it done before?:sarcasm:

[Angry Dragon]

5. In a sign of good faith these people should sign a pledge

that if this bill passes they will do this with their wages
Seems only fair that they back up their thoughts with action

[LiberalAndProud]

6. Abbott & Costello

They donated performances to sell war bonds. The IRS demanded that they pay taxes on the war bonds that the performances produced. It's an old scam, and not a nice one. Land of the free and home of the brave.

:patriot:

[WinkyDink]

7. Let's start with billionaires' dividends.

[malaise]

10. Tax the fugging rich

That is all

[TwoTap]

12. Right

Start with Hollywood...music and movie production. Nobody
needs it and they make way too much money for nothing.

[Shandris]

15. Hi welcome.

Care to be more specific?

[TwoTap]

17. Thanks

...for the welcome. Does this forum bump everybody off a lot?

Anyway, that was tongue in cheek. Nobody pays income tax but
those that can't afford it. Do away with it comepletely and
tax sales.

[Commie Pinko Dirtbag]

22. Ah, I see, the "just kidding" defense.

:eyes:

[LiberalFighter]

13. If a family of 4 had income of just $100k

their federal tax would only be $10,650 if they took the standard deduction.

Taxable income would be $73,600

($1,700) The first 17k would be taxed at 10%
($7,800) Between 17k and 69k would be 15%
($1,150) The remaining at 25%
($10,650) Total Taxes

If they itemized their deductions I imagine that the normal taxpayer would be able to have about an additional $2,000 in deductions which would lower their amount to nearly $9,000.

Not including an itemized return this taxpayer would have an effective tax rate of 10.65%.

10.65% on $100k

Not 25%

Not 33%

[stockholmer]

16. you both are wrong , you are incorrect in claiming the calculations based on a FAMILY of 4

The author was giving a SINGLE person as an example.

The author is wrong, in that the total federal income tax paid would be around $19K, not 40K, after the standard deductions and exemptions


http://www.moneychimp.com/features/tax_calculator.htm

[LiberalFighter]

18. The OP didn't specifically state it was for a single person.

Other than stating you still could be a family of 4 with just one wage earner.

I at least had more specifics.

[stockholmer]

20. not to be argumentative and get stuck in the weeds but the author did say one person

"Imagine this scenario: You make $100,000/year. In a fit of complete insanity, you decide that you want to withhold your entire annual salary to pay down the debt. Hey, you can always move in with mom for the next year, right?"

I do admit that it was sloppy math on his part, and ultimately unnecessary to make his point.

cheers

[LiberalFighter]

21. All the op stated was "You make $100,000/year."

Not exactly clear that the household only has one person.

And again, at least I included more specifics that defined the results.

[sinkingfeeling]

14. Is there going to be a similar check off box on stock trades?

[ellenfl]

19. teabaggers should be stepping right up . . . eom

[chill_wind]

23. kicking (to late to rec)

Googling various reactions to this- real interesting.