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Unless the US Congress takes action this year, the nation will be facing a “stimulus” reduction via changes in tax rates and federal spending provisions, all taking effect in late 2012 and early 2013. Here is the list of these provisions:
1. The Alternative Minimum Tax (AMT), currently at 28% for those filing jointly with incomes of $74K or greater, will drop down to $45K. That means that middle class families making over $45K will not be able to use deductions (medical, etc.) to pay less than 28% in taxes – a substantial tax increase on the middle class.
2. The so-called “doc fix” provision, which is currently keeping the government from implementing a 25% cut on physician payments by Medicare, will expire unless Congress acts.
3. The Payroll tax cut will expire at the end of 2012, increasing from 4.2% back to 6.2%.
4. The Super Committee’s inability to reach a decision last year will force mandatory cuts (sequester) in the US government’s discretionary spending. A great deal of that will hit the defense industry.
5. Unemployment benefits for workers who have exhausted the standard 26 weeks of benefits will be phased out.
6. Numerous temporary research and development tax benefits to corporations will expire.
7. The 2001 and 2003 tax cuts are set to expire. This includes tax rates on those making over $250K as well as qualified dividends and in particular the 15% rate on long term capital gains. People are wondering why we are having a string of large IPOs this year (including may private equity backed IPOs), even in a less than friendly IPO environment. Part of the reason is that the current cap gains tax rate may be the lowest that the owners will be paying in the foreseeable future.
8. At the end of the year the infamous debt limit will hit again, potentially forcing further cuts.
According to Goldman Sachs, the total of amount of dollars the US government will be taking out of the economy is about $600 billion. Clearly some of these provisions may be modified or extended. But given the sharply divided Congress and the contentious election year, the political impasse is likely to continue. A large portion of these tax increases and austerity measures may take effect. These changes will potentially be a positive for the US budget deficit, but for an economy that is still fragile and somewhat dependent on government stimulus, it will certainly generate a material drag on the GDP growth.
Will Congress kick the can down the road between November and January?
What are the consequences? Should Americans be worried?
Who has confidence in Congress to do the right thing by the people in such a short time?
Will America have a better chance to succeed if Harry Reid loses his job as leader?
Who will get it done? President Romney or President Obama?
You know if we sat back and just did nothing and let all this happen, the deficit would almost be eliminated.
I see that you want we old people on SS to get a much larger part in paying this deficit and the debt than we are doing now.
I get hit hard by points 1, 2, 3 and 7. No I don't make over $250k but the Bush cuts are going to expire and all of us who pay taxes got cuts and will see them go away.
Actually one of those Bush cuts was the marriage tax that mom and I can't avoid without divorcing so we can live together the way so many younger people do these days.
How many of the 49% who haven't been paying income taxes will have to begin paying if this all happens? None, you say. Well hell they should get a chance to help pay off that national debt that they get paid from. Is that really wrong thinking.
Unless the US Congress takes action this year, the nation will be facing a “stimulus” reduction via changes in tax rates and federal spending provisions, all taking effect in late 2012 and early 2013. Here is the list of these provisions:
1. The Alternative Minimum Tax (AMT), currently at 28% for those filing jointly with incomes of $74K or greater, will drop down to $45K. That means that middle class families making over $45K will not be able to use deductions (medical, etc.) to pay less than 28% in taxes – a substantial tax increase on the middle class.
2. The so-called “doc fix” provision, which is currently keeping the government from implementing a 25% cut on physician payments by Medicare, will expire unless Congress acts.
3. The Payroll tax cut will expire at the end of 2012, increasing from 4.2% back to 6.2%.
4. The Super Committee’s inability to reach a decision last year will force mandatory cuts (sequester) in the US government’s discretionary spending. A great deal of that will hit the defense industry.
5. Unemployment benefits for workers who have exhausted the standard 26 weeks of benefits will be phased out.
6. Numerous temporary research and development tax benefits to corporations will expire.
7. The 2001 and 2003 tax cuts are set to expire. This includes tax rates on those making over $250K as well as qualified dividends and in particular the 15% rate on long term capital gains. People are wondering why we are having a string of large IPOs this year (including may private equity backed IPOs), even in a less than friendly IPO environment. Part of the reason is that the current cap gains tax rate may be the lowest that the owners will be paying in the foreseeable future.
8. At the end of the year the infamous debt limit will hit again, potentially forcing further cuts.
According to Goldman Sachs, the total of amount of dollars the US government will be taking out of the economy is about $600 billion. Clearly some of these provisions may be modified or extended. But given the sharply divided Congress and the contentious election year, the political impasse is likely to continue. A large portion of these tax increases and austerity measures may take effect. These changes will potentially be a positive for the US budget deficit, but for an economy that is still fragile and somewhat dependent on government stimulus, it will certainly generate a material drag on the GDP growth.
Will Congress kick the can down the road between November and January?
What are the consequences? Should Americans be worried?
Who has confidence in Congress to do the right thing by the people in such a short time?
Will America have a better chance to succeed if Harry Reid loses his job as leader?
Who will get it done? President Romney or President Obama?
If Harry Reid doesn't lose his job, Obama sure better or we are dead. Even if Reid does lose his job and Congress repeals Obamacare it will be stopped by Obama and if he doesn't it can't happen even if Romney does win. Yep, I think we need to replace both of them to avert a complete takeover of our lives under Obamacare.
Will Congress kick the can down the road between November and January?
The Democrat Senate under Harry Reid certainly will not show up for work and will not agree to a bipartisanly passed US House budget prior to November.
You know if we sat back and just did nothing and let all this happen, the deficit would almost be eliminated.
You're absoutly correct and it will be interesting to see how things pan out. I'm sure the GOP will continue to act like children, but I wouldn't mind at all for Obama to stand his ground and just let everything expire.
The Bush/GOP give-a-way party is over, it was a monumental disaster that caused the collapse of the economy, it's time for everyone to tighten their belts, and get back to the Clinton plan that was a massive success and had the nation well on it's way to being debt-free.
The Democrat Senate under Harry Reid certainly will not show up for work and will not agree to a bipartisanly passed US House budget prior to November.
It is pretty obvious that we will be without a budget for several more months. Only if the GOP takes both houses and gets it done by February sometime will it happen in the next 7 or 8 months. Harry sure isn't going to allow it to happen and the media is siding with him.
You're absoutly correct. It will be interesting to see how things pan out, and i'm sure the GOP will continue to act like children. but I wouldn't mind at all for Obama to stand his ground and just let everything expire.
The Bush/W give-a-way party is over, it was a monumental disaster that caused the collapse of the economy, it's time for everything to tighten their belts, and get back to the Clinton plan that was a massive success and had the nation well on it's way to being debt-free.
You know if we sat back and just did nothing and let all this happen, the deficit would almost be eliminated.
Not even close.
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