President Barack Obama and a slew of his fellow office-seeking Democrats made a point of campaigning on the idea of tax increases for the uber-wealthy and tax cuts for everyone else.

Part of Obama’s plan to decrease the tax burden on the working class is what’s being termed the Make Work Pay Tax Credit.  It’s not just a means of providing some tax relief for the sake of helping those on the middle and lower rungs  of the economic ladder, it’s also become a component of the hotly-debated stimulus package.

The Make Work Pay Tax Credit is an interesting topic of discussion because it demonstrates how a plan can be tweaked (if not overhauled) in the political process.  It’s also a conversation piece because it reveals a little bit about different potential mechanisms for injecting cash into the economy.

Originally, the President advocated a $1,000 per taxpayer tax credit.  That credit was extended to those who paid and those who didn’t actually earn enough to pay income taxes.  The details in terms of actual implementation were (and remain) a bit hazy, but the basic idea was to give everyone a credit in hopes of allowing them to keep more dough in their pockets.

As the massive stimulus bill has been adjusted, debated and compromised, the $1,000 figure has vanished.  Based on the latest assessments, it looks like the Make Work Pay credit is going to be $500 per person (some say $400 is a possibility).

CNN breaks down the probable format for Make Work Pay:

The credit would essentially work as a payroll tax credit equal to $500 a year for individuals and $1,000 for couples. And the money could be delivered fairly quickly simply by having employers reduce the tax withholding in a person’s paycheck.

The full credit would be limited to those making $75,000 or less ($150,000 or less for couples). Individuals making between $75,000 and $85,000 (and couples making between $150,000 and $170,000) would get a partial credit.

The credit also would be refundable, meaning that even tax filers without any tax liability — typically very low-income workers — would receive one.

So, we’re beginning to get an idea of how much money this is going to amount to, but that’s only part of what’s going on with “MWP”.  It’s also interesting to look at the different implementation options available.

When President Bush wanted to stimulate the economy with a cash injection, the check writers in Washington got busy.  Stimulus checks were sent directly into the mailboxes of those who qualified.  That doesn’t seem to be the plan with Make Work Pay.

Instead, there are two other options.

First, employers could adjust the amount of money taken out of employee paychecks to compensate for the credit.  According to the aforementioned CNN piece, that would put a little less than $40 in pocket of every employee who receives weekly checks.

This kind of “drip system” is criticized by those who think the best route to stimulus would involve an in-whole “payout”, but it’s more likely to produce quick results than the alternative means of implementation.

If the money isn’t “credited” in the form of decreases paycheck reductions, it could be used as a tax credit for the flat $500/person sum at the end of 2009.  In other words, it might just become another credit to offset income tax burdens or to boost refunds next year.

It’s hard to get too excited about the likely success of a $500/individual tax credit to solve our economic woes.  If you believe in the overall approach, this component would seemingly help move things along, though.  If you are an advocate of using tax reduction and cash injections to mitigate the recession, however, it’s hard to be happy at a break that’s been sliced in half and that won’t be administered as quickly as possible.