Renewing the "Bush tax cuts"

[LCP]

It appears that they will be renewed. What I'm hearing is that the issues are for how long and for who.

Is it clear what the legislators mean when they refer to the "Bush tax cuts"?

Might there be some items scheduled to change on 1/1/11 that won't get extended?

[JohnH]

I don't really care what they call them, as long as they get renewed. As a matter of fact, I think I'll refer to them as the Bush-Obama tax cuts in the future if that happens. I think it's important to give full credit wherever it is due.

There's a sweet irony here - Washington is figuring out that when the economy is in the tank, it's better to leave more money in the hands of the taxpayers. So how it it than taxpayers can make better spending decisions when economic times are bad, but when times are good they lose that ability and it becomes preferable for Washington to confiscate their money and make spending decisions for them?

[erchess]

Sensible Suggestion

Before the recent election a Republican I saw on TV made what I thought was a very sensible suggestion. He suggested that we keep the tax code as it is through 2012 and have a national conversation about how big we want government to be and how we want to apportion its costs among ourselves, culminating of course in the Presidential and Congressional elections of 2012. At that time the Presidency, the entire US House and one third of the Senate will be in play. The guy expressed the opinion that the government Republicans are for includes spending cuts to the point that current or possibly even reduced revenue would be quite sufficient to pay current expenses and pay off the debt. He didn't get into specifics about what should be cut and anyway I imagine that isn't suitable conversation for this board. I only raise this because someone on the other side of the spectrum from me made a suggestion I can agree with.

[JohnH]

That's a suggestion I certainly would heartily support.
A National Referendum on the size & scope of government.

[veritas]

If you mean

That's a suggestion I certainly would heartily support.
A National Referendum on the size & scope of government.

the nation coming together and insisting our representatives do what we want, I'm all for it. If you mean a direct vote forget about it.

We have an initiative process in Oregon (first in the nation), you won't like the results.

Refer to my signature line.

[taxea]

this is not a tax cut this is a retention of 2009 taxes. Dems keep calling it a cut for which the govt has no money to support. this is tax money that has not been in the budget since 2003. How is that a tax cut?
The GOP intends to ask for denial of pork to keep money that is in the budget and they also want to keep the estate tax and step up of basis as it was in 2009. Hopefully they will be successful however, don't expect much of anything to actually happen until after the first of the year. GOP does not expect that the dems will do anything during the lame duck session and they surely will have a better chance of extending these laws once the newly elected are in office.
Also look for the new 1099 law to be dumped

[JohnH]

I just KNEW there was a reason I'd been feeling better about things since Nov 2.

[AZ-Tax]

Cut taxes on middle class beyond the current Bush tax cut

This is no brainer, taxpayers (TP) fear the word “taxes” unless the word “cut” is in front of it therefore Pres Obama has no choice but to renew it or does he? I think we can all agree that at least 80% of all TP’s earn less then $250K TI per year therefore at least 80% of Walmart, Kmart, Target, Walgreens, etc. shoppers earn less the $250K TI so wouldn’t it make more economic sense to place more disposable income in their hands especially given our current economic condition. So with this 8 to 1 ratio, 8 TP’s purchase 8 toasters vs. 1 TP purchasing 1 toaster. If you owned a small appliance store, would you rather sell 8 toasters that day or 1 toaster that day? How about selling all 9 toasters for the $250K+ TP has the money.

Increase Jobs? We are talking personal income tax rates. What guarantee TP’s earning over $250K+ of TI will create jobs with more disposable income opposed to adding to their yachts and/or classic cars and/or vacation homes etc. What, the honor system, give me a break.

I have about a dozen individual clients who earn $250K+ TI and none of them have any influence over their employers hiring. Small businesses like Sch C & S-Corp, not one of my Sch C & S-Corp clients make over $250K TI….somewhat of a non factor.

When Pres Obama was asked last nite on 60 mins to make a counter offer to the Bush tax cuts, he should have said “I will renew the Bush tax cuts on one condition, temporary cut taxes in addition to renewing the Bush tax cuts, on TP’s making less then $250K”. How do we afford it, how do we afford the $700 billion projected cost to retain the current personal income tax rates on TP’s earning $250K+.

[RitaB]

Will you run?

I don't really care what they call them, as long as they get renewed. As a matter of fact, I think I'll refer to them as the Bush-Obama tax cuts in the future if that happens. I think it's important to give full credit wherever it is due.

There's a sweet irony here - Washington is figuring out that when the economy is in the tank, it's better to leave more money in the hands of the taxpayers. So how it it than taxpayers can make better spending decisions when economic times are bad, but when times are good they lose that ability and it becomes preferable for Washington to confiscate their money and make spending decisions for them?

My kids and I always say we wish O'Reilly would run for POTUS. If he won't, would you?

[taxmom34]

i have been curious for a long time that maybe someone on this board has seen the answer to. How many of our representatives are in that $250K? from news items seems like a lot of the rich and famous are willing to pay more taxes and i was just wondering how many out of the 2% are politicians?

[Jiggers]

Cut Expenses?

When Pres Obama was asked last nite on 60 mins to make a counter offer to the Bush tax cuts, he should have said “I will renew the Bush tax cuts on one condition, temporary cut taxes in addition to renewing the Bush tax cuts, on TP’s making less then $250K”. How do we afford it, how do we afford the $700 billion projected cost to retain the current personal income tax rates on TP’s earning $250K+.

I think Congress, both houses AND both parties, need to consider cutting expenses and entitlements versus raising taxes.

We can't keep spending and spending and spending and expecting those classified as "rich" to continue paying for this uncontrolled spending.

My income is limited to what my business makes. I budget my income for needs (food, home, insurance, medical, retirement, etc.

Congress spends and spends and liberals and those receiving the entitlements want to raise taxes.

This has got to stop.

I wish I could make up my budget, with lots of fun stuff in it, and then charge AND get what it takes to cover that. But in a real world that won't happen due to competition.

[Bees Knees]

How do we afford it, how do we afford the $700 billion projected cost to retain the current personal income tax rates on TP’s earning $250K+.

I never believe the projected cost estimates, since they do not factor in the change in spending behavior of those who have their taxes cut or raised.

For example, if you cut my taxes by $100, the projected cost estimate says it will cost the government $100 in taxes not collected. That is only true if I shove that $100 of extra cash in my mattress and sit on it for the next 20 years.

However, if I spend that extra $100 in reduced taxes, it means someone else is earning $100 more than what they would have earned had I not had my taxes cut. Thus, if you assume they are in a 30% tax bracket (federal income and Social Security taxes), the government collects $30, meaning it only cost the government $70 to reduce my taxes $100.

If that second person who earned a net $70 of after tax money from me turns around and spends the $70, someone else is earning $70 more than what they would have earned had I not had my taxes cut. Thus, if you assume that person is in a 30% tax bracket, the government collects $21, meaning it only cost the government $49 to reduce my taxes by $100.

If that third person who earned a net $49 of after tax money from the second person spends the $49, someone else is earning $49 more than what they would have earned had I not had my taxes cut. Thus, if you assume that person is in a 30% tax bracket, the government collects $14.70, meaning it only cost the government $34.30 to reduce my taxes by $100.

And so on, and so on.... Of course, that assumes every dollar saved is spent, which is not always the case. However, it is safe to say that tax cuts do encourage spending money that otherwise would have gone to the government in the form of taxation, which in turn causes the economy to grow. Thus, government projections on the cost of tax cuts are not entirely accurate.

[RLymanC]

Another way Bees

On this particular day a traveling Shreveport salesman is driving through
> town. He stops at the Hotel Cazan and lays a $100 bill on the desk saying
> he wants to inspect the rooms upstairs in order to pick one in which to
> spend the night.
>
> As soon as the man walks upstairs, Bosco, the owner, grabs the bill and runs
> next door to pay his debt to Boudreaux the butcher.
>
> Boudreaux takes the $100 and runs down the street to retire his debt to
> Trosclair the pig farmer.
>
> Trosclair takes the $100 and heads off to pay his bill at T-Boy's Farmers
> Co-op, the local supplier of feed and fuel.
>
> T-Boy at the Farmer's Co-op takes the $100 and runs to pay his debt to the
> local prostitute, Clarise,
> who has also been facing hard times and has had to offer her "services" on
> credit.
>
> Clarise rushes to the hotel and pays off her room bill with Bosco, the hotel
> owner.
>
> Bosco then places the $100 back on the counter so the traveling salesman
> will not suspect anything.
>
> At that moment the salesman comes down the stairs, picks up the $100 bill,
> states that the rooms are not satisfactory, pockets the money, and leaves
> town.
>
> No one produced anything.
>
> No one earned anything.
>
> However, the whole town is now out of debt and now looks to the future with
> a lot more optimism.
>
> And that, my friend, is how the United States Government is conducting
> business today.

[Snaggletoof]

Classic Case

Classic Case of such govt miscalculation happened in Oklahoma, and if I've already told you this, you can tune me out.

Oklahoma Dept of Tobacco and Firearms (or whatever they call it in OK) was asked for the total (in millions) of packs/cartons of cigarettes sold. Their govt then calculated the effect of thumping a $3 per pack tax on cigarettes, discounted it a little for those who would rather quit smoking, and then basked on the forthcoming billions in windfall revenue the state would enjoy.

Smokers are perhaps addicted, but not stupid. For those of you who know Oklahoma, you cannot swing a dead cat without coming within 10 miles of an Indian Reservation. Not hard to figure out what happened. Net effect on tobacco taxes was a LOSS, not an increase.

[JohnH]

Rita, thanks for your confidence, but I value my reputation too much to become a politician.