海角大神

Michael Cooper over at The New York Times stopped off at the Pig Pickin and Politickin rally in North Carolina the other day to ask folks about the Obama tax cuts. Their , not surprisingly, was 鈥淲hat Obama tax cuts?鈥�

This despite the fact that about one-third of the much-reviled 鈥攐r almost $300 billion--came in the form of tax reductions. According to Tax Policy Center, 96.9 percent of households enjoyed a tax cut that averaged almost $1,200. Just one measure鈥擮bama鈥檚 Making Work Pay tax credit鈥攑ut more than $116 billion into people鈥檚 pockets in 2009 and 2010.

Yet, a Times poll found that fewer than 10 percent of those surveyed had any clue. Remarkably, fully one-third thought their taxes went up鈥攅ven though the actual number was about zero.

How could so many people have missed it? After all, $1,200 ain鈥檛 nothing. In large part, it was due to the design of Obama鈥檚 tax plan. Earlier stimulus tax cuts often came in the form of ostentatious checks from the Treasury. In 2008, for example, President a tax reduction only half the size of Obama鈥檚 (about $145 billion). But it was delivered to households in the form of rebate checks鈥攇enerally $600 per adult and $300 per child.

However, conventional economic wisdom argues that increased withholding over time is more effective stimulus than a single big check. The theory is that people will bank a one-time rebate but spend the extra bucks they get in their weekly pay.

Obama listened to the economists. His signature Making Work Pay credit was built into the withholding tables. Other stimulus tax cuts, such as his expansion of the Earned Income Credit, didn鈥檛 show up for most recipients until they filed their tax returns last spring.

Did the Obama strategy succeed economically? Did nearly $300 billion in tax cuts boost demand at a time when the economy desperately needed a jump start?

The Administration thinks it did. But University of Michigan tax professor , who has studied the economic response to tax stimulus, isn鈥檛 so sure. About a quarter of those who responded to a Michigan survey in 2008 predicted they鈥檇 spend the Bush rebate, but Joel found that only about 13 percent said they鈥檇 boost spending in response to the Obama stimulus. Of course, what people say they are going to do and what they really do are sometimes not the same. The truth is, we鈥檒l never really know what they did with the money.

We do know that most Americans never noticed the extra bucks. One reason: About one-quarter of the stimulus tax cut was devoted to extending the Alternative Minimum Tax patch. This protected about 30 million middle-class households from that hidden tax, but you can鈥檛 expect people to respond to a law that exempts them from a tax they never knew they owed.

There are some other interesting theories about why the tax cut went unnoticed: Perhaps it was due to state and local tax increases that occurred at the same time. Or because rising health insurance premiums ate up that extra after-tax pay. Of course, it may also have been the result of unrelenting GOP criticism of Obama鈥檚 phantom tax hikes. If you are told every day that your taxes went up, I suppose you might believe it, reality to the contrary.

Finally, I wonder how many people even know what their take-home pay is anymore. At least two-thirds of workers are paid through direct deposit and even if we get a pay stub, there is a good chance it will gather dust, unopened, in a pile on our desk. In that environment, do Americans notice if their after-tax income has changed, and why?

Congressional Democrats may be about to pay a fearsome price for Obama鈥檚 decision to follow economic conventional wisdom. I鈥檒l leave it to future historians to tell us whether the great unseen tax cut was an exercise in economic courage, dumb politics, or both.

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