Your paycheck is about to shrink

At the end of the year, the Making Work Pay tax credit will expire. The credit benefited over 90% of Americans in 2010, allowing individuals to save $30 a paycheck (the credit was subject to a phase out for those individuals who made over $75,000 and couples who made over $150,000). However, with all the talk surrounding the Bush Tax Cuts, it seems unlikely that the credit will be extended in 2011. Additionally, any policy with the word "stimulus" attached onto it is very unfavorable in our current state. By extending Making Work Pay, it would cost the government $60 billion in 2011. As one tax analyst explained, "Most people may have no idea they received it and no idea that it's going away...But what you can be certain of is that they'll have less money and they'll spend less -- and this is a terrible time for the economy to lose $60 billion of spending." Although I agree that the economy cannot lose any more spending, I disagree that 100% of the credit would be spent. Meaning, those people who would benefit from the credit are more likely to save rather than spend - additional debt is more likely to be paid down versus spending more at the local Walmart.