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URL:  https://boards.fool.com/quotthe-simple-solution-would-have-been-to-put-15159131.aspx

Subject:  Re: Not everyone gets a tax rebate Date:  6/12/2001  6:51 PM
Author:  FBCinvestor Number:  153259 of 910561

"The simple solution would have been to put in the 10% bracket on the first 6K (for single, non-HoH) or 12K (for married) taxable income, have companies adjust wage withholding (starting 7/1 or whenever) to reflect this, and simply have many of us get a refund when we filed our 2001 taxes. Unfortunately, for political reasons the decision was made to issue these "rebate checks". "


That's a simple solution from an economic side, and academics probably back that scenario en masse. But from a practical side, changing withholding would benefit no one but accountants.

Changing withholding would add unneeded expense and complexity for businesses, because they'd have to go back in the middle of the year and restructure their payroll. For companies that do it in-house, it would probably require some overtime. For those that outsource their payroll, a withholding change would be a windfall for accountants and companies like Paychex and ADP, who would be called on to change withholding amounts for everyone and probably rejigger the payroll software for larger employers.


As a software developer who used to write payroll software, I would have to agree with this statement. Most of the software I have worked with allows the user to easily change the tax rates but may have a fixed number of tax brackets which would require a change in the software.

Even Microsoft Money has this problem. The tax estimator cannot correctly estimate 2001 taxes because it does not have a slot for the new 10% tax bracket.

I do agree that most of us could have waited until tax time to receive our refund. The expense of sending out millions of checks could have been used to give us a slightly larger refund instead. And what is with this snail-paced implementation of the other tax changes? In two years a new congress could totally undo the whole package. In ten years congress could, by doing nothing, implement the largest tax increase in history as the whole thing rolls back.
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