The Bush tax cuts are due to expire at the end of the year.  It sounds like President Obama is standing firm on tax cuts for the middle class and that reports from the Huffington Post were wrong.  He still feels it would be irresponsible to permanently extend tax cuts for the upper 2%. 

According to CNN:

Speaking Friday, Obama said his “number one priority” is extending tax cuts for the middle class. “I also believe that it would be fiscally irresponsible for us to permanently extend the high income tax cuts,” he said. “I think that would be a mistake, particularly when we’ve got our Republican friends saying that their number one priority is making sure that we are dealing with our debt and our deficit.”

A good compromise would be to push the upper limits a little higher.  Perhaps only those making $500,000 and above should not be have tax cuts extended.    No one ever wants to be that person who has their taxes raised.  However, those making over a half million dollars annually can sure afford it more than the children of the lesser gods.

29 Thoughts to “Tax Cut Speculations”

  1. marinm

    It’ll be interesting to see how this plays out both in the press and in Washington.

  2. Neither party entrenched in DC wants to cut spending and possibly alienate ordinary, uniformed voters. Most people pay no attention to this stuff until they notice that THEY aren’t getting “stuff.” Each party wants the OTHER party to get the blame for those cuts and wants THEIR party to get any credit. Since you can’t have your cake and eat it too, we continue to be entangled in this mess.

    Neither party wants to simplify the tax code because their power is found in the ability to customize the tax code to help special interests. Think how little we would care about Congress if corporations did not have to lobby them for tax breaks. Either kill the tax breaks or kill the corporate taxes. Corporations just pass those taxes to us, anyway….

    Neither party truly wants to shrink the size of government and give more liberty to the citizenry.

    Thus, the Tea Party was born. Let’s hope that THEY don’t get sucked into the DC mode of political business.

  3. Slowpoke Rodriguez

    I believe there are acceptable compromises for this problem. We will see a bunch of politicking here I imagine.

  4. e

    again with the class warfare. do the democrats not have anything new to add to their playbook in the last 70 years? you can steal every red cent from the rich and it won’t make a dent. who the hell is obama or any other politician to play god and decide what is ‘fair’ and how much wealth is appropriate for each person. i spit on them all

  5. Too bad that the tea party brought the OBNOXIOIUS religious right and their social agenda with them. Had they left them at home, I might have been willing to listen. I saw it as wolves in sheep clothing, waving Constitutions, flags, and carrying fetuses in bottles under their clothing.

    Now I just plan on holding them accountable for the no tax increase stuff. Cut spending and don’t allow Reaganesque tax hikes to sneak in. And while I am barking orders, they aren’t to allow it to be taken from ss or medicare, the presumably easy targets.

  6. e

    reaganesque tax hikes is the biggest oxymoron since jumbo shrimp or military intelligence. reagan was responsible for enormous tax cuts, which allowed the u.s. economy to recover from the carter malaise

    1. @e,

      Big myth. Check the changes in the tax codes under Reagan. Some of the biggest tax increases in modern times took place under Reagan.

      Sorry, I paid them.

  7. e

    During Reagan’s presidency, federal income tax rates were lowered significantly with the signing of the bipartisan Economic Recovery Tax Act of 1981 which lowered the top marginal tax bracket from 70% to 50% and the lowest bracket from 14% to 11%. The Tax Reform Act of 1986, another bipartisan effort championed by Reagan, reduced the top rate further to 28% while raising the bottom bracket from 11% to 15% and reducing the quantity of brackets to 4

    1. @e

      You are free to think I am a liar if you want. I was a grown woman paying taxes during this time and my taxes went through the roof. Many people who were adults and paying taxes during this time period will verify this fact. Oh wait, I was (still am) middle class.

      Meanwhile, keep drinking the kool aid. If you loose your car interest, credit card interest, and entertainment write offs when it is your job to entertain customers, you are looking at lots of tax increase. That is just what I can remember. And I am not asking Mr. Howler when he gets home. I don’t want to hear all the cussing. The Saint Reagan tax relief was window dressing, not acutality. My tax man is still telling me things went out under Reagan, and this is how many years later?

  8. Pat.Herve

    what is raising taxes? There are many more fees that just the plain old income tax. Reducing the income tax, yet raising the energy tax is something Reagan did . He also raised Corporate tax in 82, adn income tax in 83. He, like many other Presidents, played the shell game of diverting your attention, and not looking behind the curtain. Look at PWC, the BOCS have reduced our taxes, yet, the fees have gone up (look at the Library), I still pay for the sticker, and I have not gotten a reduction in my property tax bill, although they say they reduced taxes.

    So – look at the whole picture, not just the parts you want to remember. I was also unemployed during some of that time, and that was my ‘depression era’.

  9. Thanks for putting your ‘memories’ in print Pat. Too many people have a romanticized notion of the gipper. Some fairly harsh taxes went in to effect back in those days. You are right. They didn’t all have to do with the tax code.

  10. Pat.Herve

    Amnesty was a good word back then too!

  11. TWINAD

    I thought the Bush cuts were “temporary”. Isn’t the meaning of the word temporary that they will one day revert to the higher level!? If that is so, why is Obama taking the blame for the cuts expiring? The cuts were never meant to be long term. Okay, great. He is willing to extend them for the middle class, but why all the howling from Republican’s about no extension for the upper echelon? Why didn’t Bush make them permanent tax cuts if they were never meant to go back up?

  12. George S. Harris

    @e
    And the national debt was the highest it had been until the Bushes came along :-(. Now higher than any time in our history–mostly thanks to Reagan, Bush and Bush.

    BTW “e”–do you live under a stone or what? What being some other planet.

  13. kelly3406

    There are always winners and losers when the tax code is changed, but I am not sure how MH ended up paying more taxes.

    Even if deductions were reduced, a couple filing jointly with an income of $30K in 1980 paid 37% in taxes. A couple who made $50K would have paid a whopping 49% in 1980. When Reagan left office in 1988, both couples with those incomes had to pay only 28% in taxes.

    I remember that my parents were thrilled with the changes — their tax rates went way down. But they never had to pay interest on credit card balances and never deducted entertainment expenses, so maybe the change in deductions did not affect them.

    1. I think a lot had to do with what kind of work you did, Kelly. My husband was in sales. Sales was a big deal in this area so a lot of people got slammed. And you were expected to take customers out to lunch etc. And you put your expenses on a credit card, and you bought cars….

      I know that is why we got hit so hard. But they are still showing up, even though my husband is not longer in that kind of work. I don’t even listen now when the tax man says Reagan….

  14. kelly3406

    @George S. Harris

    The deficit has a much higher correlation to the party in control of Congress than it does with the party holding the Presidency. It is well known that the government took in more revenue after the tax rates were reduced under Reagan, but the increase in government expenditures dominated so that the deficit went up.

    Which party do you suppose was in control of Congress when these deficits were racked up? It just happens to be the same party that controlled Congress during the last two years when the debt increased by $3 trillion.

  15. e

    obama has racked up more debt than all the presidents from washington to bush combined. i dont see how reagan and the 2 bushes can be held responsible for that.
    furthermore, while it it true that certain deductions like interest cards etc were eliminated under reagan, the overall tax brackets were reduced, and most people benefited from the overall reduction in taxes.

    1. Recession, e. You know why. You can agree or disagree with it but you do know why. throw in a recession and a war or 2 and you are going to spend some bucks.

  16. e

    sorry, i don’t buy it. the cold war was an enormous expenditure during the ronaldus magnus era, but the obama deficit dwarfs all others in comparison. answer: ballooning out of control entitlement programs. soon the interest on the debt alone will be larger than the entire defense budget

  17. Apparently you want to live in a depression. I don’t. I can remember the stories my father tells. No thank you. I pass on that.

    I am curious what you are calling out of control entitlement programs? Could you possibly mean Medicare? Social Security?

    Who is going to get the credit for the money returned from TARP? How about GM?

  18. Medicaid, Medicare, and SS ARE out of control. They comprise all spending that is not borrowed. Our ENTIRE tax base goes to these programs.

    We need to put it all on the table and force congress to debate what gets cut and how.

    1. @cargo,

      No one has the nads to do that because a whole bunch of baby boomers would nvote them out of office in a New York minute. You cannot do that to people who have paid in to programs their entire lives. Now Medicaid, that’s another matter and much of that comes from the states. It also isn’t a program people have paid in to under their names.

      I guess I fail to see how social security is ‘out of control.’ And yes, there is medicare freud. That needs to be fixed.

  19. Government Motors did not pay their TARP debt with money they owned, but with other borrowed taxpayer money. They lied.

    http://www.nytimes.com/2010/05/02/business/02gret.html?_r=1&ref=business

    Taxpayers are naturally eager for news about bailout repayments. But what neither G.M. nor the Treasury disclosed was that the company simply used other funds held by the Treasury to pay off its original loan.

    Neil M. Barofsky, the inspector general overseeing the troubled asset program, revealed this detail when he spoke before the Senate Finance Committee on April 20.

    “So it’s good news in that they’re reducing their debt,” Mr. Barofsky said of G.M. But he went on to note that G.M. was using other taxpayer money to make the loan repayment, according to the transcript of his testimony.

    Armed with this information, Mr. Grassley fired off a letter to Mr. Geithner on April 22, asking for details of the transaction. “I am concerned … that this announcement is not what it seems,” he wrote. “In fact, it appears to be nothing more than an elaborate TARP money shuffle.”

    “Much of it will never be repaid,” Mr. Grassley added. “The Congressional Budget Office estimates that taxpayers will lose around $30 billion on G.M.”

    (Taxpayers still own $2.1 billion in preferred stock of G.M. and almost 61 percent of its common equity.)

    1. So who will be buying GM stock on Nov 17?

  20. Out of control means that there is no limit. We are broke. And sorry, people have been paying into a tax called soc. Sec. but, its no longer THEIR money. The fed spent it. Its a tax. The feds have no fiduciary responsibility to pay it back. That’s why they can change the age for payout at will.

    Privatize it and put it all into T bills.

  21. Cato the Elder

    @Moon-howler

    I’m trying to get an allocation, but the big boys have it so oversubscribed it’s going to be tough getting more than like 1000 shares. (taking it for a trade only). This IPO will be very good for Ford, if it goes well because the market will likely start giving a higher valuation to F if the GM price holds.

    1. @Cato, I was listening to cnbc this morning. I think it is going to be real hard to get your hands on any shares for a while.

      I hope it just boosts ford. there was also a deal with SIAS …1%?

  22. Cato the Elder

    @Moon-howler

    Just sayin’

    Ford looks like it’s breaking out here – it’s trading at levels not seen since 2004. All the big volume is on the up days. If the GM price doesn’t fall out of bed after the IPO then it could run to 20 by year end.

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