cur-mud-geon: anyone who hates hypocrisy and pretense and has the temerity to say so; anyone with the habit of pointing out unpleasant facts in an engaging and humorous manner
Our taxes will increase next year if the ‘Bush Tax Cuts’ are permitted to die, as will be the case unless Congress gets its act together. President Obama would have us believe these tax cuts were primarily a gift to the “wealthy”. Too many in Congress are probably dreaming of just how they can spend that newfound money on some new programs to stimulate public employee headcounts, and maybe even on some of those vaunted ‘shovel-ready’ jobs that have not seemed to materialize to the degree we were told would be the case.
We have certainly not seen our President take a position to insist that Congress act to prevent these breaks from being taken from us. Wouldn’t that be a way to garner some votes?
Just what will happen with continued inaction in Washington?
The current 10% tax bracket will go away and the new lowest bracket will be 15%; just a real increase of 50% for the people who are in that bracket.
The current 25% rate will go to 28%. That is just a 12% real increase.
The current 28% rate will go to 31%. That is just a 10.7% real increase.
The current 33% rate will go to 36%. That is just a 9.1% real increase.
The current 35% rate will go to 39.6%. That is just a 13% real increase.
The maximum federal rate on long-term capital gains and dividends is now 15%. That rate is scheduled to go to 20% on long-term gains (a 33% real increase). That rate on dividends will increase to 39.6% (a 164% real increase).
Worse yet is that the people in the two lowest tax brackets today pay zero tax on long-term gains and on dividend income. That comes to an end with rates of from 10% to 28% depending upon the source of that income.
And finally, for this discussion, married people who have been able to pay just twice as much as single people will see a rate increase because the spread will be reduced from exactly twice to something less than twice thus effectively increasing real taxes. Similarly, married couples’ standard deductions, which are now exactly twice that of singles, will be reduced to 167% of two singles thus netting a real tax increase there, as well. Of course, itemized deductions and personal exemptions will see the return of ‘phase-out’ rules so there will be more money taken from people in that area, too.
This tax increase, do to inaction, will do nothing to stimulate an economy that most of us would like to see improve regardless of who is in the Whitehouse. It is way past time for the adults in Congress to get this taken care of, and for the President to sign off.