President Bush might have thought he was doing taxpayers a favor by reducing the amount of taxes withheld from paychecks, but a lot of Baltimore-area workers apparently wish he hadn't gone to the trouble.
Big employers say workers are streaming into payroll offices to submit new W-4 forms to counteract the new federal withholding requirements that went into effect March 1.
The new withholding rates, which were implemented by executive order, were seen as a way to pump as much as $2 billion a month into the flagging economy. The action increased the take-home pay by as much as $345 a year for a married couple and up to $172 for a single worker.
But the extra money, which amounts to less than 50 cents a day for each worker, is not a gift. Taxpayers will have to make up the difference next year by getting smaller refunds or by paying additional money to the government.
About three-fourths of taxpayers now receive refunds, and the refunds average about $1,200, said Domenic J. LaPonzina, a spokesman for the Baltimore district of the Internal Revenue Service. "Most people who get refunds will still get refunds. They will just get smaller refunds," he said.
Even though the government is waiving penalties for under-payment of taxes that result from Mr. Bush's action, many workers want to increase their withholding rates to put them back where they were.
An estimated 20 percent of the 10,000 workers at the Westinghouse Electronic Systems Group in Linthicum have put in new W-4 forms, and more are expected to do so as employees who are paid monthly see the change on their checks, said Westinghouse spokesman Bryan Wiggins.
Of the 9,000 workers at Baltimore Gas & Electric Co., 750 to 800 have submitted new forms, spokesman John A. Metzger said.
Bethlehem Steel Corp. has also seen a "noticeable" increase in W-4 submissions, even though the new rates didn't show up on paychecks until yesterday, company spokesman G. Ted Baldwin said.
Even government workers dislike the change. Hundreds of the state's 88,000 employees have submitted revised W-4 forms, said Marvin A. Bond, a spokesman for the state comptroller's office.
Meanwhile, H&R Block Inc., the large tax-preparation company, is mounting a nationwide campaign urging people to readjust their withholding and is offering to prepare W-4 forms regardless of whether a person is a customer.
"A lot of people rely on that refund as a savings account or money for their summer vacation," said Al Gould, a district manager for H&R Block.
The reduction in withholding rates also could have longer-range effects on the economy when people start getting their smaller refund checks next year. In the past, they have often used these hefty refunds to buy big-ticket items, such as cars.
"No matter what type of car they buy, they often depend on a refund check" for a down payment, said Charles C. Fenwick Jr., president of Valley Motors Inc. in Cockeysville.