Wednesday, November 17, 2010
Is there any more graphic measure of the incompetence of our federal government than that it is the second half of November and nobody has the first clue what their tax rates will be for 2011? If one steps back and reflects on that single fact, the forehead-slapping failure of our political class stands out in high relief.
Sorry to belabor the obvious, but occasionally the obvious bears belaboring.
The Slurpee Summit, which was supposed to address this, has been postponed from tomorrow until Nov 30. According to Press Secretary Gibbs, the delay was at the request of Boehner/McConnell so that they could "get their caucuses in order."
I've speculated before that no deal will happen as there's no basis for compromise at the moment. Thus, all our taxes will go up on Jan 1 -- we're all in this together, aren't we?
But who gets the blame? Delay helps Boehner/McConnell, I expect.
"I won't raise your taxes one dime!"
TH is spot on. As someone who works in a family CPA firm, this is something I am discussing on a regular basis with our clients and prospective clients:
Higher Tax Rates
Beginning in 2011, tax rates that were in effect prior to 2001 return. The top income tax rate goes back to 39.6 percent, and the special low 10 percent bracket is eliminated. Whether this will actually happen will be at the heart of a spirited battle in Congress during 2010.
Estate Tax Revived
For individuals dying after 2010, the federal estate tax returns with a $1,000,000 exemption and a 50 percent maximum rate. Congress is likely to take some action on these rules during 2010.
Increase in Capital Gains and Dividend Tax Rates
The tax rate reductions for long-term capital gains and dividends is scheduled to expire this year.
• In 2011, the maximum long-term capital gains tax rate goes back up to 20 percent from 15 percent. A lower 10 percent tax rate is used by individuals who are in the 15 percent tax bracket. Their long-term capital gains had been tax-free since 2008.
• In 2011, dividend income (other than capital gain distributions from mutual funds) is taxed as ordinary income at your highest marginal tax rate.
Child Tax Credit
The credit of $1,000 per eligible child reverts to $500 after 2010. After 2010, none of the child tax credit will be refundable to taxpayers unless their earned income is more than $12,550. This is one of the many Bush tax cuts currently scheduled to expire after 2010.
Payroll Tax Credit
Starting in 2011, the partial credit for payroll taxes paid is no longer available.
Section 179 Expense Deduction
The maximum amount of equipment placed in service that businesses can expense drops to $25,000, down from $135,000 in 2010.
College Savings Plans
Beginning in 2011, 529 Plans can no longer be tapped tax-free to pay for a computer or Internet access.
Tax Credit for College Tuition
The Hope credit is again limited to the first two years of college and is capped at $1,800. None of the credit is refundable if it is more than your regular income tax liability.
Earned Income Tax Credit (EITC)
Temporary increases in the Earned Income Tax Credit for filers with three or more children and the higher income levels for the phaseout of the credit are repealed.
Mortgage Insurance Premiums
The special itemized deduction for mortgage insurance premiums paid on mortgages taken out after 2006 expires on Dec. 31, 2010.
IT is a heavy reminder of what has happened on Our Own sound side. The fashion amongst many Conservatives is actually more obsessed with Bristol Palin dancing.
It is fashion, and it is missing the bigger picture dramatically.
Sometimes one has to wonder, coming from the school of WFB and Dr. Friedman.
I think it is great for Conservatives to have a celebrity like Mrs. Palin - a fine American.
Yet, I grow weary of the hype and the fashionable embrace.
Even the other day, I had to watch Sarah Palin hide behind Ronald Reagan again, when asked about her 'reality tv show' - and other questionable offerings.
This was nearly insulting - as I thought keep the GIPPER out of it, stand on your own two feet.
I just listened to Rush - and this diddohead from 93 was utterly disappointed. Instead of being focused on priority issues like the TAX INCREASES Democrats would like to stick us with, he too was carrying the Palin Franchise water (something he said after 2006 he would never do).
Sure it is fun to know the Palins drive the Democrats nutty, but fashion and identity games are always weak, end up in major flops.
If the mighty EIB and others, focused on making the tax rates of today permanent, even pushed for lowering many taxes - like the corporate burdens, as well as focused on pushing Congress to expel the ugly Rangel - we would see more potential for serious action.
Instead, we see the other, fashion about a young girl on a dance show?
That is not conservatism ... and reminds one of the recent fiasco in Delaware.
"these poltroons don't even have budget yet!!!!"
That's why I don't think there will be any deal on the Bush tax cuts. There's no basis for compromise, and not enough time and goodwill to create one.
Don't forget that the train has already left the station -- tax increases happen -- unless the train is recalled.
Any extension of the Bush tax cuts will increase the deficit, as calculated by the Big Government Gnomes. Boehner/McConnell can't increase the deficit, else they betray their Tea Party Mandate. Ergo, they'll require Obama to make spending cuts in the 2011 budget to balance any tax cuts. e.g., You could fund a one-year extension of the tax cuts by stopping unspent Stimulus, etc. Obama will never agree. Ergo....
Obama is acting like he still holds all the cards. Which will piss Boehner/McConnell off to no end. They don't trust Obama and so they won't bend. Queen of Hearts Pelosi is an added complication.
Let's not forget the Alternative Minimum Tax. If it's not adjusted, millions more taxpayers will find themselves paying more for tax year 2010.
I've been swept up in the AMT maelstrom for the past few years and I'm disgusted that the government allows a second, shadow tax to operate in tandem with the "real" income tax.
"I'm disgusted that the government allows a second, shadow tax to operate in tandem with the "real" income tax."
The poor government has to do something to keep the cart moving when pretty much ALL of the horses have hopped on the cart.
TH's post confuses me a bit; what about 2011 tax rates is so mysterious? All the so-called Bush cuts are expiring.
We may all hope or expect the President will sign some agreed extension to be passed by Congress, but that is all in the future. It doesn't exist.
It may be clear to even the village idiot that allowing the largest tax increase in history to proceed while the economy is struggling to escape recession's effects is insane, but to the ideological crazies in the Democrat party anything is possible. This, after all, is the same administration that had Eric Holder yesterday calling themselves "pleased" with their failed terror trial result in civilian court.
"Eric Holder yesterday calling themselves "pleased" with their failed terror trial result in civilian court"
Time for Holder to get busy booking some space under the Obama bus (if there is any space left).
The only charge verifed was the conspiracy charge, yet the charges of actual commission were nullified.
Even a lawyer as incompetent as Holder should be able to make quick work of that discrepancy on appeal and have his man out on the street by Spring.
Of course Holder already has a conflict of interest, but that was ignored.
The best Holder can hope for is to keep the guy buried at Gitmo.
Isn't it great how all of Bush's "terrible mistakes" are beinf ratified by the current administration??!!