American Morning
Bush-era tax cuts: What's really at stake?
Those tax cuts – should they expire for everyone? Or just the rich? And if that's the case - is that fair? It depends on your perspective.
What if you're married, with two kids and make $70,000 a year? Right now you pay $2,300 dollars in taxes. If the Bush tax cuts expire, you'll pay $4,900 dollars. That's $2,600 dollars more per year...or $7 a day. Put another way: That's roughly three gallons of gas.
Salary: $70,350
You Pay = $2,300
Expire You Pay = $4,900
$2,600 More Annually = $7 a day = 3 gal. of Gas
If you're married, with two kids and make $325,000 a year, you now pay $63,000 in taxes. If the tax cuts expire, you pay $71,000 - that's $7,400 extra. Or $20 a day. Two movie tickets and a small popcorn.
Salary: $325,000
You Pay = $63,600
Expire You Pay = $71,000
$7,400 More Annually = $20.00 a day = 2 movie tickets & Small Popcorn
If you make $5 million? You pay $1.3 million in taxes right now. If the tax cuts expire you'll pay $1.6 million. That's $276,000 more or $757 dollars a day. Or a 32-gig IPad with WI-FI.
Salary: $5 Million
You Pay = $1,320,200
Expire you pay – $1,596,600
$276,400 More Annually = $757 a day = 32 gig IPad with WI-FI
The information comes from Deloitte Development. They put this together using a “composite tax payer” based on IRS data for 2010. These figures are based on a married couple with two kids and includes wages, capital gains, dividend income, and common deductions.
We want to hear from you. After seeing a breakdown of these figures, what do you think should happen with the Bush-era tax cuts?
Should President Obama...
* let them expire across the board?
* extend them only for the wealthy?
* extend them for a year and reevaluate?
Sound off in the comments section below.
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I dont get it- why does middle class double- but no one else's does? I see eventually we will have 2 classes – the weatlhy and poverty. there will be no middle class. I am in the 70K range- and as I see it – I make less money every year with all these different taxes going up – I never get ahead
Phase 1 : This great recession came from Downfall of the Middle Class still needing Care.
1. The deficits have mushroomed not because of Social Security, Medicare and Medicaid but because of "two unpaid wars, tax breaks for the wealthy, a Medicare prescription drug bill written by the pharmaceutical industry, and the Wall Street bailout."
a. Why not stop the Afghanistan war at a price tag of 140 billion a year...why not reduce what U.S. spends for military 800billion a year…U.S. military budget is as big as the next 27 countries COMBINED !
Even Overall US intelligence budget tops $80 billion annually.
b. End Bush-era tax breaks for the wealthiest Americans.
c. Eliminate tax credits for big oil companies that have posted the highest profits in history.
d. For example, a reeling housing market probably would slide further if, as recommended, Congress were to repeal the tax deduction for mortgage interest
e. The country got here because of the bursting of an $8 trillion housing bubble. This bubble was fueled by the reckless and possibly unlawful practices of the Wall Street banks, like Morgan Stanley, the bank on whose board Bowles sits
Co-chair, Erskine Bowles, who has been on the board of Morgan Stanley since 2005, probably prefers pointing harpoons at other targets.
2. AS we are all aware, while many of small businesses are in financial trouble, lots of big name companies are reluctant to expand businesses, even with adequate capital.
From what I understand, they might take into account that the country is suffering from 9.6 percent unemployment, more than 25 million people are unemployed, or have given up looking for work altogether, tens of millions of people are underwater in their mortgage and millions face the prospect of losing their home to foreclosure, and beyond, say, low demand.
Given, the choice is clear, which one is going a long way to desperately needed job boost, tax credit for middle class or others.
Phase 2 : The reps Will Stomp On Middle Class & Economy.
The SHAMELESS reps' principal : No principal & power-only !
1. The reps' campaign slogan, spending cut, has nothing to do with the deficit cut.
The Bush tax cut for the wealthy will add an additional $700 billion to the deficit over a decade.
Under the existing Bush tax cut for lavish bonus parties, a sole job plan for the republicans, the country already saw millions of job cuts.
And hence it's the right time to ask themselves as to how they can pay for it.
As for the Democrats, sound investments = deficit increase.
As for the reps, empty giveaway policy = SHAMELESS top priority.
2. Over the duration of healthcare debate, using the preliminary cost analysis of CBO, the reps opposed the public option stubbornly, but after the release of final score, they have been defiant on the referee.
Inaction cost in relation to health care reform totals $9trillion over the next decade.
The nonpartisan Congressional Budget Office estimates that reform will reduce the federal deficit by $143 billion over the next 10 years and as much as $1 trillion during the following decade
3. In view of Medicare & Social Security :
“Don't Let Government Touch Your Medicare & Social Security”
“We will instead Stomp On Your Medicare & Social Security”
4. Jobs ahead in another Bush era ( = Entire Downfall ) ??
I think D.S. is going to realize vividly how Bush era wrecked economy.
Let them expire and let the next congress take up the issue and give it a new title; Americans fighting for their own personal tax relief.
If the rich keeps getting richer and middle class keeps shrinking we are going to end up with a larger population at poverty level. This is a recipe for disaster for US. We need to shrink the rich and lower income population and help the middle class grow. The rich doesn't need seven Jaguars in their garage but the poor needs to eat and the middle class does the back breaking work in this country now and needs to be supported. The lawmakers need to make the right decisions now before it is too late.
As per the norm tax cuts are fine and dandy if the economy is humming alomg. It is not. Extending tax cuts for the wealthy will not boost consumer spending, nor add growth to the weak economic recovery. It will affect 1% of the population. A middle class tax cut will improve the recovery. Abbott and Costello need to go back to the tanning salon and catch some more rays. Take your tax cuts with you.
Regards,
Fred
Where is Carol coming up with her numbers above? I am married with 2 kids. My annual income RIGHT NOW is $74,000.00.
I just looked at my most recent pay stub, and I pay $229.00 which is about $5,900.00 a year.
@Brian – your comment that the $70K's family's taxes increasing by 100% can seen another way.
Lower income households pay very little taxes NOW relative to the wealthiest. In fact, itemized deductions get phased out for the wealthiest including the value of mortgage interest. The top 1% of US household by income pay about 40% of the current federal tax bill.
So what you've calculated is that the Bush tax cuts (and some tax credits even when you don't have any income) most greatly benefit the middle class overall. Hence of the $4 trillion in lost revenue to the government if we extended the cuts for 10 years, $3.3 Trillion goes to 98% of households.
If your serious about deficits, then we drop the extensions for everyone.
If we extend for all, sure the wealthy take more per-capita, but not so much as a ratio to the taxes they are paying already.
Let them expire.
I am tired of hearing that the Bush tax cuts help jobs...when they do exactly the opposite.
Salaries and hiring people are a business expense...expenses are not taxed....only the money left over when you are NOT hiring people nor spending money in the local economy is taxed. These tax cuts for the rich are actually a disincentive to economic growth.
Cut out ALL deductions for EVERYBODY no matter how much your income is.
THe family that makes $70000 has their tax go up almost 100%. The tax on the higher income earners only goes up a fraction of their current tax. Your story does not include all deductions the high income earners have such as mortgage deductions for million dollar second homes.
I agree with MeLoN and others who mentioned above. How on earth can you get back MORE in taxes than YOU PAY IN? This is absolutely ludicrous.
One segmenof society shouldn't pay more of a percentage than any other – that's just wrong.
lol@ Carol ... they had to cut out their broadway shows .... that statement is so funny... I don't even know how to comment on it.
Here is a partial answer. STOP sending BILLIONS of dollars to overseas countries who love our money, but could care squat about the United States.
How many of these countries provide assistance to the United States?
Zil, zero, elzipo. Oh, did I say none?
The story that was presented, whether accurate or not, shows that the family making $70.000 a year would have their federal taxes increase by more than 100% whereas the Family that makes $5 million has a tax increase of around 20%.
All this means that Obama is making all kinds of friends in the wrong way and that in 2012 after we elect a different president he more then likely still wont get it .
Where are the other Warren Buffetts? Given the state of our economy, it appears to me that the one element of our society that could bear more of the burden of lowering the debt are those who don't need it. Why aren't the rest of the rich stepping up and telling Congress that they don't want the Bush era tax cuts extended? I'm not a part of the upper one percent but I am a part of the upper five percent and I would be willing to pay more. What about the rest of you?
The comments above go both ways, raise taxes or keep lower taxes. Whichever it takes, if we are going to reduce or pay off the deficit, then we have to pull the trigger on one of the options and reduce our outrageous spending at the same time.
However, we have had lower taxes for some time now, but I as a reader must ask, has revenue increased with the Bush era tax cuts? If so, fine, and we just need to quit spending so much. If not, then eliminate the Bush era reductions and let's start being fiscally responsible by taxing sufficiently for what we spend or not spending more than we tax.
It really is pretty elementary!
Gerald L. Hall
Pekin, IL
@Dan... of course I am.... as long as everybody is paying what they should. Aren't you willing to sacrifice to help America?
Refer back to my earlier statement about changing the whole system. A flat tax system would increase revenue and would be fair to all. The tax system is broken so bad now – it can't ever be fixed. Nobody should get anything back when they pay taxes – let alone get more back than what they paid in.
One of the big missing elements here is the impact on the dividend tax. Most of the whining focuses on the top marginal tax rate shift of from 35% to 39.6% which is not a big difference.
However, the impact on dividends, from 15% to 39.6% is a huge increase. If a household has more income than average in dividends, they will get killed by this shift. If you happen own dividend oriented stocks, too bad for you.
When this country becomes a middle class country without so much money piled up on the rich end and with poverty on the other, many of the problems we face, financial and spiritual, will be resolved because we all will be reasoning from a similar perspective. The country was much less economically stratified 60 years ago when I was young. If we could restore economic equality, combine it with the civil rights equality achieved since, this would be a much better country.
Not many, if any, of the richest people in this country pay the top tax rate. Warren Buffet paid only a 17% rate in '08. It's even worse when you consider what corporate America pays, or I should say doesn't pay.
In 2008, the Government Accountability Office found that “two out of every three United States corporations paid no federal income taxes from 1998 through 2005.”
I think we need to make the Bush tax cuts permanent for everyone. To let them expire will hurt the small businesses.
I believe we should stop using our tax dollars to give those who did not pay them in. I am a firm believer that you could qualify to get back every penny you paid it, but never a penny more than you paid in. For example, it is possible to pay in $100 and get back $7,000. What's wrong with this picture? I believe stopping this from happening and leaving the the tax cuts in place will is the course we should take.
@MetloN, are you willing to see your paycheck shrink, meaning less money to pump in to the economy?
Come on – Do you really think that the example for the $5 Million Salary is ACCURATE. Do you really think those folks pay Carol's example of over $1 in Taxes? Can you say Tax Deductions???? This kind of simplistic reporting creates the wrong impression
It is a common belief that raising tax rates will increase tax revenues. Those that believe that have not studied their history. If we look at when tax rates have been reduced we can see that tax revenues actually increased.
Let all the tax cuts expire ... for everybody. People want to pay off the national debt – as long as THEY don't have to help pay it or if it affects THEM. Having tax cuts expire is the best way to pay off the debt – yet nobody wants to do it. Amazing.
How can the tax cuts for the middle class not get passed? This economy will absolutely choke on this. What money will be flowing through the economy then? Where is the patriotism. Do your part. Over #250,000 and whining about paying taxes? Stop padding your fat asses and pitch in. Talk about greed, this is it.
I think THE best and quickest way to at least help bring down the deficit is the cancel ALL, repeat ALL foreign aid. How can this country afford to send billions out to other countries when we can't afford to fix our roads, bridges, schools, the list goes on....
How can this country financially justify housing, clothing, and feeding our nations after a disaster when we have homeless, hungry, and unemployed in this country?
Thomas Armstrong
Marietta, GA
In these examples you make it sound as if the additional tax burdens are no big deal. Consider the example of a family making $ 325,000 per year. An additional $ 7,400 may be a trivial amount to you, but to parents paying college tuitions and other college-related expenses, it can be the difference between your child going or not going to college. And at that income level there are NO other breaks to help with these expenses. You are just out of touch with the financial realities.
Barack needs to restore, and set in cement, proportional progressive taxes upon the obscenely rich who exercise a perfected control of our Supreme Court, gutted our Constitution, and virtually comandeered the elective process. 1% of the nation's population now posesses over three quarters of its privately held land and 5% nearly half of its capital. No democratic structure of government can withstand such a concentration of power. This modest act will certainly not break the stranglehold our new American plutocracy exerts over what was a matter of decades ago still a recognizably democratic nation, but it will at least dilute its supremacy until it can vitiated altogether.
I paid over $3000 to the IRS at the end of the year this in 2009. Does that mean if they don't extend the tax cuts I will have to find even more to pay the IRS at the end of the year? I am in the $70K-$100K income level (married).
The GOP has been saying that you don't raise taxes during a recession. According to the criteria used for recessions, we're no longer in the Great Recession. Secondly, letting any of Bush's tax cuts expire wouldn't be raising taxes. Bush & the GOP placed an expiration on the tax cuts because they knew we didn't have tthe money to pay for them.
What did the Republican icon, President Reagan do during his recession?
Pressured to counteract the increased deficit caused by the recession, Reagan agreed to a corporate tax increase in 1982. However, he refused to raise income taxes or cut defense spending. The Tax Equity and Fiscal Responsibility Act of 1982 instituted a three-year, $100 billion tax hike—the largest tax increase since World War II.
I am in the first bracket listed, $70K.
As it is right now, with gas going up, the price of food increasing dramatically, this is the last thing I need.
And they say the economy is bad now? Double my taxes, and I will NOT be spending money on ANYTHING besides necessities.
Either let the tax cuts expire for everybody .... or let the tax cuts extend for everybody.
It constantly surprises me that in a country where everybody is supposed to be treated equally there are people wanting to legally treat people by different standards (exactly like ObamaCare).
Anyways... the tax system should be replaced with a flat tax system that has no tax credits, refunds or deductions. Everybody pays the same rate no matter what your income is.
Cut the amount of aid the US gives the world and use that money to pay our debt. Cut all the ear marks for all politicians.