Sunday, July 25, 2010

Six Months to Go Until The Largest Tax Hikes in History

What will be the effect on the economy - and on your family budget?

By Danny

Anybody else looking at sources like this?
Six Months to Go Until The Largest Tax Hikes in History
Here are the tax brackets for 2010, married filing jointly:
$0 – $16,750 10% 10%
$16,750 – $68,000 15%
$68,000 – $137,300 25%
$137,300 – $209,250 28%
(Presumably that covers most here, but it goes up from there. . .)

Unless congress acts, on January 1 of 2011 these will jump to:
$0 – $16,750 15%
$16,750 – $68,000 28%
$68,000 – $137,300 31%
$137,300 – $209,250 36%
For someone making taxable of $68,000 per year, that is a tax increase of $7,500 per year in federal tax.

Also, the child tax credit drops from $1000 to $500 per child. So if you have four kids, that's another $2,000 per year in federal tax on top of the $7,500.

Given the size of the deficit, and the spending habits of the present congress, what are the chances they will fix this?

What will be the effect on the economy - and on your family budget?

Editor's addendum & disclosure: Gentle reader Danny submitted the eye-opening main article; your blogmeister took the editorial liberty of providing the helpful links.... and the following bonus video, of course. (We do hope Gentle Reader Danny will approve of these editorial additions):



Depressedinadepression said...

....that makes me need to VOMIT!!!

althepal said...

Thanks for the article and video, Danny! I noticed that Obama's lips were moving when he made his bogus pledge, so I'll assume he's probably related to Boss Godfrey, heheheh.

Doug said...

Godfrey and Obama never lie and they're always right.

Danny said...

I remember when I was a kid.

People made their own food.

They fixed things when they broke (including things like darning socks that had holes in them).

Eating out was a luxury.

They saved for things. People only borrowed to buy a modest house.

But for the last few years, we've spent what we didn't have - cars too fancy, homes too big, way too much stuff - all on credit - especially the government. There was always a sense that the bill would come due someday.

It's just starting to come due.

(BTW Rudi did a nice job fixing up my simple comments.)

Oh, and yeah, lets build another downtown motel with borrowed public money. With a $10,000 hole in their budgets, a lot of families will be doing a lot more vacationing, and yeah, doing it in Ogden. Uh huh.

Danny said...

... the brackets I quoted were from two sources, but there are other sources ... there is some level of speculation at this point.

The family I mentioned - their increase might be closer to $5000 per year with the other rates and the per child, not counting the other taxes.

Bottom line, people may want to nickel and dime my numbers, but the hit to families is huge whatever sources one uses for the new brackets.

marshallUtah said...

Freedom isn't free

Curmudgeon said...

Well, let's see now... these taxes will "return" the article says. How delicately that word was chosen. Return. Return from where?

Well, it seems when G. Bush became president, he decided that the then existing huge surplus in federal revenues should not be dedicated to reducing national debt and shoring up social security and medicare [thus reducing the national debt obligations further] --- both of which proposals were in the Gore platform]. And he decided that the painfully negoitated bi partisan pay/go agreement in Congress [no increases in federal spending without either increased revenues to pay for them or reduced expenses elsewhere to compensate for them], negotiated early in the Clinton term, which pay-as-you-go agreement was in not small way responsible for the first balanced budget in modern American history and for a substantial element of the surplus. No. Bush had a better idea. "It's the people's money, and they know how to spend it better than government." So instead of the surplus going to pay down federal debt, Bush and his "tax cuts in good times, tax cuts in bad times, tax cuts at all times" mafia rammed through huge federal tax cuts, and dismantled pay/go entirely.

The projected costs of this massive tax cut however, were so great that Republican fiscal conservatives --- real ones, not the Bush-Bishop-Chaney kind --- balked. The only way to bring the long term red ink totals down was include in the tax cut bill a sunset provision ten years out eliminating the tax cuts. Bush and his fellow fiscal mescal smokers insisted by that date the massive tax cuts would have so increased federal renenues that the tax cuts would doubtless be extended by the "permanent Republican majority" they thought they'd created.

Of course, the Bush massive tax cuts, combined with the Bush administration's massive increase in spending, and gutting of the pay/go agreements led to the hugest run up of federal debt in American history.

What's going to happen in December, if Congress does not act, is that Bush's bill's roll back, adopted by the Republican congress, of the Bush tax cuts will go into effect.

What the article doesn't bother to mention is that the Obama administration is backing a plan to shelter those making under $250K from the tax roll backs [allowing the old taxes to return only for incomes higher than that], nor does it mention the Administration's support of a bill to significantly raise the sheltered limit on inheritance taxes [I think to a million per heir, or their abouts]. Nor does it mention that The Party of No is stoutly resisting the Obama plans, and insisting none of the taxes should return as the Bush law provided, and it will agree to no less. Meaning of course that because of a Republican filibuster, all of the Bush bill's tax "return" will happen.

But hey, why let facts get in the way of what the Chicken Littles think it will be effective to have people believe?

Tired said...

To court the family vote Republicians raised the child deductions and now they will also expire. They will blame the Democrates for the increase which again is just a roll back.

I am tired of the worker next to me braging they paid no Federal Tax because of large family deductions. Just like in the school system if you want quality you need to fund it if you use it.

Fair is Fair said...

The disparity in that tax rate for people in different income brackets is out of control. If someone makes $300,000 a year why should the government tax him to such a high rate? As I see it, that person should pay a small premium but not 2 to 4 times what others pay.

We’re blessed to live in a democratic society but we function in a capitalist business environment. Let’s not kill the golden goose.

Curmudgeon said...

Fair is fair:

It's called the graduated income tax. And its original presidential advocate was President Theodore Roosevelt. Republican.

Ray said...

Curm: Well put! Couldn't agree more!

smudge said...

Thanks Curmudgeon. I'm glad you're around.

Its all Bush's fault... said...

Yeah me too Curm. Just wish someone would point out that Congress does the spending and the Democrats took over Congress in 2006. The deficits more than doubled each year after the liberals got control of the National checkbook.

Sick of the Bush bashing crap!

IDNHSWTW said...

@ It's All-
Honestly, the whole blaming Bush thing has been sooooo over used, that it's turned into nothing but a joke anymore. I hear it said in a joking manner for the most random things a lot! No matter how credible that lame accusation MAY have been at one time, it's nothing but a joke now.
Kind of like the blue dress with the stain on it, and the statement " I...Did NOT have sex with that woman ". Yawn.

Fair is fair said...


I didn't ask who passed brought the graduated tax into being. Frankly it doesn't matter whether it was a republican or a democrat.

My point is that the graduated tax is not fair.

Curmudgeon said...

It's all:

Sorry, but there are some uncontested facts that seem to me it's pointless to ignore:

(1) after immense and difficult effort, the leadership of both parties in Congress hammered out the "pay as you go" agreement. Both had to do it and endorse it so that neither party could use it against the other. It took a long time to arrange, it took heavy arm twisting by the congressional leadership of both parties. And they finally got the agreement done: the pay as you go agreement requiring new spending to be offset by increased revenues and/or reduction in spending on existing programs.

(2) The pay as you go agreement was immediately abandoned upon Bush taking office. What had taken nearly two years of good faith negotiations for the national good on the part of Republican and Democratic congressional leaders, gone in an instant.

However uncomfortable those facts make you, they are facts. Nor do they add up to "it's all Bush's fault" by any means. But they are history. The one reasonable chance we had to rein in the budget no matter which party controlled Congress died when Bush took the oath of office and abandoned pay/go.

And some of the loudest screams about the "run-away debt" are coming from Senators and Congressmen who voted for the abandonment of pay/go and the resulting huge tax cuts with great glee. E.g. Hatch and others [not all Republicans by any means] for it meant their earmarks and pork barrel bills were back on the table. Let us recall that the all time peak of earmarks in budget bills came during the last two years of the Bush administration when 11,000 earmarks were included in budget legislation. 11,000. The current president has not honored his pledge to veto bills with earmarks in them, but the number was cut in the first Obama budget year to about 3000. Better, yes. Good enough, hell no. Fiscally responsible, hell no. Had pay/go been retained, though, the pork fest and feeding at the trough we've seen since would not have happened.

As for the suggestion that the Bush bill tax-reimpositions, put in the tax cut bill to make the red ink projections small enough so that fiscal conservatives would vote for the bill [history], should all be re-instated, here's what that would probably lead to. From today's SL Trib:

"Enacted under President George W. Bush, the tax cuts will expire next year if Congress and the president act to extend them. Republicans and some Democrats favor continuing them all, at a cost of adding at least $2 trillion to the federal deficit over the next ten years."

"At a cost of adding at least $2 trillion to the federal deficit." That's what passes for "fiscal conservatism" mostly on the right these days.

My own view is, we couldn't afford the Bush tax cuts when they were enacted, and we can't afford to re-instate them now when our national debt is more than double what it was then, and still growing.

We spent the money. Wisely or not is irrelevant now. We borrowed it and spent it. Time to pay it down. Let the taxes return. The bill's come due. Shoving out another decade and making it at least 2 trillion bigger makes no sense to me.

Its all Bush's fault said...

Curm, Your knowledge of history(although somewhat skewed left) is not exceeded by your understanding of economics.

Bush pleaded for the line item veto to get the Democrat AND Republican pork crap out of the legislation. The Dems Pelosi and Reid were in charge since 2006. Blaming Bush for the excesses of the liberals is simply disingenuous.

AWM said...

All I know is that next year I'll pay in taxes (on April 15th) in one additional check, (above and beyond what I paid out of my income throughout the year) the same amount I would have paid for the custom Dyna Glide I've been lusting after for the past 2 years...Sigh!

Biker Babe said...

anybody besides me [with a regular wage, i.e. salary or hourly] notice that they are not taking out as much taxes out of the gross pay on the checks either ... so that means even more will be owed, if the rates go up.

hmmm ... something to make you feel good and comfortable: less tax out of check = more to spend right now! ... then something to make you scream: hike the tax rate and make you wish you had more held out of your paycheck because now you owe taxes for the first time in 20 years!


NoxLux said...

Please, all you undertaxed, fat and lazy americans:
tell us where you would make the cut? Where would you find all of these 100's of billions of dollars you want to "cut"?
And do not just squeeze the balloon at one end, thinking it wont expand at the other. Really, look at the defiCIt chart and tell me where ALL THIS MONEY IS GOING TO COME FROM.
tHE PROBLEM IS THAT EVERYONE, INCLUDING CORPORATIONS, HAVE BEEN UNDERTAXED ACCORDING TO THE SERVICES RECIEVED. Meanwhile you have all worked harder and harder, just to make ends meet. its easy to blame taxes, but really, where did all the wealth in this country go? why are global businesses not hiring, when they have more surplus cash in world history. why do these corporations WANT the us government to fail? You are blaming the only entity that stands between global domination by a few dozen trillionaire families: the us government. Pay your damn taxes, buy american, and tell your kids to quit acting like the world owes them a living. Get america out of other countries, and get back to spending what we have: not just the government, but you too. And ditch your visa debit card and use cash. visa wants to own you.

NOXLUX's Answer Man said...

Yo NoxLUX dude or dudette,

In case you do not know about it, there are "Safety Nets" which are very commmonly used by Les Miserables (non working and technically poor) to game the system. They simply get pregnant over and over again having more and more dependent and mostly fatherless children. For which they receive thousands of dollars a month. The more babies the more the check. And you and I pay through the nose for this.

Secondly, the illegal immigrants suck up hundreds of billions a year in emergency case freebies, pre school, elementary school, junior high school, high school, and yes here in Utah at least, College tuition and funding. Add to that excess, costs for everyone for Spanish instructions, free meals, the list is almost endless and infinitely expensive. Cut that by simply enforcing Federal laws and deport these people. And of course being primarily Catholic, they have a stream of "anchor babies" which by birth, are declared American citizens. These hispanic kids suck up more billions in State and Federal aid programs all the way through high school and college.

Example; my grandson is a sophomore in high school. He (his parents) must come up with $900 in fees plus pay his lunch money AND pay 100% of their combined State income tax PLUS 70% of their Property Taxes directly to the School District. His friend, Javier, is Hispanic and is a mirror image of my grandson, activity wise and class coursework wise. Javier pays, nadda! The only reason. An inexplainable social "safety net" both Federal and State supported. Why is that? What is equal about that? How is that "fair"?

Cut any continued "bailout bill" or "Stimulus Bill" taxpayer money. Stop it. It does not work.

Reduce the Corporate tax rate from the second highest in the world (35%) to the near lowest. And repeal all the anti business legislation with replacement legislation with provisions which freeze any changes which hurt production and manufacturing, or services businesses for at least the next ten years. This would unleash American businesses to again reclaim our previous economy and subsequently increase tax revenues, decrease unemployment, and stabilize our economy.

This ain't rocket science...except for the ignorant and the liberals, who majored in the humanities, under water basket weaving, and stupidity.

Or...just continue on the same path FDR took during the Depression, which prolonged the Depression by at least seven years. Blithely just keep buying the liberal socialist BS with their "polarize society acts" (haves versus have nots, rich vs. poor, blacks vs. whites, Hispanics vs. whites, believers vs. non believers, name calling; e.g. racist, bigot, homophobe, Tea Partier, Uncle Toms, all designed to divide the Country and gain political points)and manipulations claiming they are the people's representatives. When they are the opposite as recent legislation proves.

Don't believe it? Just put a common sense blog entry questioning an Obama policy and see how fast the liberal/left element will react with name calling and venomous ad hominem (personal) attacks. It seems only Curm is the general exception, although he is also guilty on occasion.

I know about the "Hydraulic Principle" and the above cuts don't expand the balloon. Just press to test who has the cajoles to do something about it./

LuxNox said...

Ah, a Glenn Beck listener who lets Fox News do his fact checking for him.

Other than your facts being completely wrong as far as welfare amounts, recipients, and funding sources, your solution would be to give even more freebees to your corporate overlords, and then go on some racial witch hunt against the "other".

This rant does not even rise to the level of being answerable, except to say: God bless you, and I hope you vote for Voldemort in 2012.

I told ya so! said...

See what I mean! NOXLUX is a liberal, and a typical leftist who can not handle the truth! He can not deal with the issues nor refute any facts already widely desiminated from highly reputable sources, including the Government offices themselves.

All he can do is demean and name call like the rest of his ilk.

All the liberals EVER do is name call and attempt to attack the messenger because they have no defense for the truth.

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