The Bush-era income tax rates will expire at the end of the year. That is only one of a number of financially significant–some say cataclysmic–deadlines that occur around year end: the payroll tax holiday ends, the alternative minimum tax patch will expire, $36 billion in Obamacare taxes will take effect, tax extenders will expire, the (minimal) 2009 “stimulus” tax cuts will run out, the inheritance tax will increase, and 100% expensing for business investment will expire.
At the same time, $109 billion in sequestration begins, affecting both non-defense and, disproportionately, defense spending. But other spending reductions will go into effect as well: extended unemployment insurance benefits will expire,
and, unless action is taken, Medicare reimbursement rates for physicians will decline.
And on top of all of that, the U.S. will hit its debt ceiling of $16.4 trillion in the coming weeks.
All of the above issues, and more, will be in play in negotiations between the Obama administration and Congressional Republicans over the so-called “fiscal cliff.” Because Republicans control the House and have an effective veto in the Senate, they should be able to bargain on equal terms with the administration. There is, however, a serious problem: Republicans do not speak with a single voice. There are differences between the House and the Senate, and various groups of Republicans have differing priorities. As for President Obama, he has laid down a single marker: taxes on upper-income Americans must increase. That is, in his eyes, the one absolute.
So I think the Republicans should call Obama’s bluff, and accept his offer by agreeing to let all of the Bush-era tax rates expire. Taxes on the “rich” will go back to what they were during the Clinton administration. But so, under this proposal, will taxes on everyone else. What would this mean? The 35% bracket would go to 39.6%; the 33 percent bracket would go to 36 percent; the 28 percent bracket would increase to 31%; the 25% bracket would go up to 28 percent; and the 10% bracket would be eliminated, with 15% being the lowest rate.
But wait! you say. Obama doesn’t want everyone’s taxes to go up, only rich people’s. But really, how vigorously can the Democrats object? For nearly twenty years they have been telling voters that the Bush tax cuts only benefited the wealthy–”tax cuts for the rich!”–and that Republicans don’t want to rescind the Bush tax cuts because they are holding out for billionaires. Fine; if the Bush tax cuts only benefited the wealthy, then Democrats can have no objection to doing away with all of them, and returning marginal income tax rates to what they were during the administration of the most revered Democrat of them all, Bill Clinton. It is a little late in the day for Democrats to admit that the large majority of the Bush tax cuts went to people who are not, by any definition, wealthy.
Now what makes the author think that Dear Leader Obama and his Demagogue Party cares a whit about raising taxes on those who get income and pay taxes no matter what that income is or how much they pay? It is taking from the production and prudent and "transferring" that to those that "need" that money! Not sure that would upset them at all since Dear Leader doesn't need to worry about making anyone mad and his party and its incompetent politicians manage to get elected by the vast number of idiot voters as this last election has shown. Can't elect "radicals" like Aikn or Murdock if you have candidates with "pristine" records like McCaskill! You need to put up "moderates" like Brown in MA or Thompson, who lost to really radical and flawed Demagogues anyway, instead we are told! This is "get even" and "make things fair" time on steroids now that they have their "mandate". Welcome to the world of higher deficits, higher taxes, more regulations, higher unemployment, lower or no growth, lower standards of living, more open borders, more security threats and lower defense levels, and less freedom under "Hope and Change 2"!
John, not sure I agree. I am not sure that he won the election at all. I think that there was a lot of behind the scenes play that he put in place, or the DNC put in place with Soros help and that if the truth were told, Romney did win the election, so time to probably put that to rest by all of us. We now have to look at what is before us, not what is behind us.
If all you feel is true, then we have to realize that we are still quite a ways from what was faced by this Country in the Great Depression; yes, we are in recession or will be soon, but that is where we have been aboiut every 20 years. So, we know that Obama's policies are failures, we know that he is going to let these beneficial tax breaks go and raise taxes on the wealthy. And the result, business will not grow, it will get worse. Entitlement programs will not see the influx of money they think they will see, people will not get the help they need and suddenly realize they lost their tax breaks, too. Then it will become more evident just where things should have been, that Obama does not have the answers and that will open the door for the 2016 election and getting the Democrats with the failed programs out of office. The Republicans still need to vote against these things but let the Democratic-controlled Senate have their way and yes, will be hard on all of us, but we just need to tighten our belts, spend less and let it take it's course for 4 years.
We have risen from this before and will again. But our job is to keep reminding everyone who is in control and who is making these decisions and on whose shoulders the failure falls.
Apparently they have to see it to believe it; so that is what they are about to witness.