patrick.net

The way that the tax cut expirations shake out has been of great interest to me. I got married a few weeks ago, and my wife and I were seriously contemplating NOT mailing in the legal documentation. The marriage tax penalty looks like it will be back next year since our combined gross income is around $240k (we could get hit with $10k in additional taxes if we go back to the pre-Bush rates). I don't like it, but America has bills that need to be paid, and everyone, one way or another, has reaped benefits from the insane deficit spending our government has been doing. We all painted ourselves into this corner by electing the same fuckwads for decades and we all get to deal with the consequences.

At least we do not depend on any income from stocks. I'd hate to be in a position to care about what happens to the cap gains rates.

SFace says

let the entire damn Bush tax cut expire.

That would be the best result. They never created anything but deficits.

Capital gains should be taxed at the same rate as ordinary income, with an inflation adjustment for long term capital gains. The automatic lower rate favors Romnesia, not long term investors.

I think they should let the payroll tax cut expire and push the rest out 6 months to a year, or something. I have my doubts as to if all this stuff should expire at once.

>The bush tax cut will be particularly painful for 100K earner

http://taxfoundation.org/article/simulating-economic-effects-obamas-tax-plan

Retain the Bush tax cuts for taxpayers in the bottom four tax brackets. This includes keeping the current marginal tax rate levels of 10 percent, 15 percent, 25 percent, and 28 percent, and keeping the capital gains and dividend rate caps of 0 percent for people in the 10 percent and 15 percent brackets, and 15 percent for people in the 25 percent and 28 percent brackets.
Increase the marginal tax rates in the top two tax brackets from 33 percent to 36 percent and from 35 percent to 39.6 percent

bmwman91 says

We all painted ourselves into this corner by electing the same fuckwads for decades

2000 was looking pretty good, fiscal-wise. Then again there was a bubble then, floating everything.

But it took balls for the Dems to raise taxes in 1991 and 1993. They lost these balls when the electorate said FUCK YOU in result in 1994, just like they had booted Bush out in 1992 for going back on his "no new taxes" promise.

If we doubled taxes on the top 10% and doubled the corporate income tax rate we'd get the deficit down to $200B, maybe.

Problem is we need to double taxes on the 90% to pay for their medicare and ssa!

Not to mention how screwed this state is fiscally.

Even our cities and counties, FFS.

The rich are doing better than ever:

http://research.stlouisfed.org/fred2/series/CP

http://research.stlouisfed.org/fred2/series/GINIALLRH

so something's gotta give here

The Bush tax cuts were great for Baby Boomers who were experiencing peak income in the years prior to retirement.

Now higher income Gen-X'ers (like myself) will be paying the price for letting the Boomers slide.

Actually looks more and more like what will happen is a hard cap of $35K on deductions.

I welcome this greatly. Not only will the wealthy be nailed with the increase in capital gains tax, but they will be unable to shelter money like they have in the past. I also hope that there is a provision so that married couples filing seperately cannot both take the max deduction.

In short, the rich(I would imagine mostly families in the $150K+ range) will FINALLY have to pay taxes like the rest of us. No more parking money in real estate and filing bogus returns claiming false loses.

bmwman91 says

The way that the tax cut expirations shake out has been of great interest to me. I got married a few weeks ago, and my wife and I were seriously contemplating NOT mailing in the legal documentation. The marriage tax penalty looks like it will be back next year since our combined gross income is around $240k (we could get hit with $10k in additional taxes if we go back to the pre-Bush rates). I don't like it, but America has bills that need to be paid, and everyone, one way or another, has reaped benefits from the insane deficit spending our government has been doing. We all painted ourselves into this corner by electing the same fuckwads for decades and we all get to deal with the consequences.

At least we do not depend on any income from stocks. I'd hate to be in a position to care about what happens to the cap gains rates.

That's a personal choice. We didn't mail it in. My co-worker mailed it in in 2005 and found out the hard truth. Both of them used to get a refund, but had to pay taxes in 2005. The tax bracket is screwy to begin with. The tax system is set up to encourage people to get into mortgage debt & business debt. The more debt, the better. Credit card debt used to be deductible too. If you can't beat the system, join it and use it to your advantage. :)

Bellingham Bill says

>The bush tax cut will be particularly painful for 100K earner

http://taxfoundation.org/article/simulating-economic-effects-obamas-tax-plan

Retain the Bush tax cuts for taxpayers in the bottom four tax brackets. This includes keeping the current marginal tax rate levels of 10 percent, 15 percent, 25 percent, and 28 percent, and keeping the capital gains and dividend rate caps of 0 percent for people in the 10 percent and 15 percent brackets, and 15 percent for people in the 25 percent and 28 percent brackets.

Increase the marginal tax rates in the top two tax brackets from 33 percent to 36 percent and from 35 percent to 39.6 percent

At least it won't impact me so carry on. LOL!!!

Bi Partisan support now for hard cap on deductions.

Love it!

The cap is on individual income returns.

The capital gains tax is going from 15% to 25%.

I say let it all expire, so we can quit kidding our selves about what a great President Clinton really was.

And with out the banks rewarding savers, we will really taste the baked in bullshit goodness.

http://www.cnbc.com/id/49803756/

Bellingham Bill says

But it took balls for the Dems to raise taxes in 1991 and 1993. They lost these balls when the electorate said FUCK YOU in result in 1994, just like they had booted Bush out in 1992 for going back on his "no new taxes" promise.

It goes to show you that people don't like their taxes to be raised. It's always about raise their taxes, but not mine. If you touch their benefits, they vote you out. Give them free stuff and they will keep voting for you. Isn't that what it's all about?

Prop.30 passed, but Prop. 38 didn't. Basically, it's ok to soak the rich, but don't soak me. I voted NO on both of them, and I voted no on Measure A and yes on Measure B and proud of it. LOL!!!

It's interesting looking at the big contributors on this election. You had the union and big corporations like Microsoft and Berkshire Hathaway for Obama while you have the banksters, also corporations, for Romney. Regardless, I see every contributor donated to the campaign for their own benefit. It's business as usual. What's in it for me. :)

SFace says

The Cap is the dumbest idea ever, another AMT.

I agree since like how the hell can you plan major medical expenses?

$35,000 cap on itemized deductions would boof the California land market but good.

$180,000 income pays $15,000 state income tax or whatever, leaving $20,000 for everything else. People tithing to their church would wipe that out, LOL.

MI/Prop tax on a $500,000 house with $400,000 owed is a $20,000 deduction.

Then again, it doesn't look TOO BAD -- at the $35,000 level. $20,000 would be ouch city.

E-man says

It goes to show you that people don't like their taxes to be raised. It's always about raise their taxes, but not mine.

Not really. It IS about WHO should pay. Prop 38 would have "broadened the base" for revenue. That seems to me to be a way to "tax the lower and middle classes". Even rich people voted against that, and for Prop 30. Meaning, even rich people think rich people should pay, and they don't think the middle class should.

SFace says

dodgerfanjohn says

The cap is on individual income returns.

The capital gains tax is going from 15% to 25%.

The hard cap is in lieu of Bush tax cut expiration. That's clearly the context of what Romney proposed.

Yup. I agree.

But thats not whats being floated around congress these days.

Whats being floated by congress, on both sides of the aisle, is spending cuts in the future, combined with a current:

-Let the Bush tax cuts on capital gains expire.
-Hard cap of $35K on deductions for income tax.

And if you read the article I linked, you see that clearly it states the hard cap on deduction is for income tax, not capital gains tax.

dodgerfanjohn says

Actually looks more and more like what will happen is a hard cap of $35K on deductions.

It should be a lot lower than that.

E-man says

The tax system is set up to encourage people to get into mortgage debt & business debt.

It's set up to encourage people to have kids that they can't afford.

bmwman91 says

I were seriously contemplating NOT mailing in the legal documentation.

Like sending in a request to pay 10-15K more a year. Marriage is bad enough, let alone paying for it. ;)

Molly Munger who "donated" $44 million to try to get pro 38 passed is an idiot - what a waste of money! That piece of legislation had the same chance of passing that any of us have of making an NFL pro team.

E-man says

People will vote with their pocket book. The 1992 and 1994 elections were great examples.

Of course. But I don't hear rich people clamoring for a tax system that would move the entire burden to the poor and middle class. Wouldn't that be what they would do if they were that shortsighted? Yes, if it were not so ludicrous.

People know that it's patently unfair to ask 98% of the country to pay for the excesses of the wealthy, after their earnings, savings and homes have been decimated, while the gains have all gone to the wealthy.

They may not articulate it all the time, but they do know that taxing the middle class makes no sense, even to the rich. (That won't stop them from trying though!)

CL says

But I don't hear rich people clamoring for a tax system that would move the entire burden to the poor and middle class.

Rich people and corporations don't have to clamor. They have lobbyists to quietly write the laws in their favour.

E-man says

Because our tax system punishes married couple with two incomes. Isn't that the reason why the marriage rate has been going down?

That's why I voted FOR gay marriage in Maryland. Now the gays can pay higher income taxes to pay for all the stupid programs that the Democrats they vote for enact. That and now they get to spend some of their disposable income on divorce proceedings, etc.

E-man says

Prop.30 passed, but Prop. 38 didn't. Basically, it's ok to soak the rich, but don't soak me. I voted NO on both of them, and I voted no on Measure A and yes on Measure B and proud of it. LOL!!!

I was actually surprised at the number of folks who voted *against* Prop. 30. Given the increase affects less than 5% of the highest incomes in the state, you wouldn't expect that 40-something % of the voters voted against it.

bob2356 says

Rich people and corporations don't have to clamor. They have lobbyists to quietly write the laws in their favour.

But that's---classism! :)

ducsingle5313 says

you wouldn't expect that 40-something % of the voters voted against it

“Socialism never took root in America because the poor see themselves not as an exploited proletariat but as temporarily embarrassed millionaires.” -- J. Steinbeck

Given the increase affects less than 5% of the highest incomes in the state
The quarter percent sales tax is regressive.

EBGuy says

The quarter percent sales tax is regressive.

Average family with $1000/month in taxable purchases will see a $2.50 rise.

Shit, rents are up 8%, on a $1400/mo rent that's $112 a month.

If you ask me, we need MORE regressive taxes. That's the secret of how Germany is keeping their economy on track. That and not shipping all their jobs to China.

Bellingham Bill says

ducsingle5313 says

you wouldn't expect that 40-something % of the voters voted against it

“Socialism never took root in America because the poor see themselves not as an exploited proletariat but as temporarily embarrassed millionaires.” -- J. Steinbeck

While it maybe a bit of a generalization, I believe that in Europe/Latin America, the poor tend to despise the rich while in America, the poor want to live like the rich as evidenced by shows like Cribs, Crackdashians, etc. Both are ultimately forms of jealosy and envy and are very harmful to a peaceful life.

History seems to escape the neocon mind for some reason.

Increasing the personal tax rate makes the business tax rates more attractive. Its a natural incentive for executives to stop enriching themselves and enrich their companies by re-investing in the company instead of another 40,000 sq ft mega-mansion. You grow the company and your wealth grows withing the corporation at a lower tax rate that if you take the money away from the company in the form of profits. It also makes charitable donations more attractive. There are plenty of shelters to take options and such where they can still do nicely and afford their standard of living.

All in all, its a win win. We've been there before and life was good. Good for everyone, the middle class AND the rich.

E-man says

How could it not pass

39.4% of the presidential vote went to small-government conservatism, both the "severely" conservative Romney and the libertarian dude.

So the yes side had to pick up 75% of the Obama vote. These numbers may be off a bit but that's the idea.

E-man says

Shouldn't it be $400k for married coupled?

Married couples prefer to cohabitate as a rule. Single people do not.

This lowers the married couple's cost-of-living substantially.

Bellingham Bill says

“Socialism never took root in America because the poor see themselves not as an exploited proletariat but as temporarily embarrassed millionaires.” -- J. Steinbeck

I think Debs got 6% and was on the upswing until the Plutocrats started treating the worker as good as cattle. The poor were revolting, and not in the way that Romney says it.

And wasn't the Square Deal really a way to stop the growing Socialist movement from revolting against capitalism?

Today, the oppressed worker eats Cheetos in a recliner, with Fox telling him it's the Government's fault he's a loser.

E-man says

Why marry and be taxed more?

it's not all downside, you do get survivor benefits and stuff.

E-man says

Well, don't you think the marital rate has been declining is the result of our tax policy? Why marry and be taxed more?

Damn right.

My wife and were seriously debating NOT sending in the legal paperwork after our marriage 3 weeks ago. Simply because of the marriage tax "penalty." The benefits from being married really seemed to pale in comparison to a potential $10k/year tax hit (if all the tax cuts expire in 2013). We mailed it in anyway since we do trust each other to make executive decisions in the event of the unthinkable, but it looks like a fucking scam otherwise.

SFace says

If it comes down to it, just let the entire damn Bush tax cut expire

This is a winning strategy, but I'm afraid that somehow Obama will fuck it up.

Let everything expire, and then initiate a new (similar tax cut) that's just for the middle class. If republicans fight that, or deny it if it can't be tied to a tax cut for high incomes, then next election cycle it will be their fault that the middle class was fucked over.

E-man says

What the hell am I suppose to do when the tax system is set up that way? :)

In some ways it encourages you to build new housing and rent them. So altogether you provide some social good, employing people and making it all happen. Kudos.

marcus says

SFace says

If it comes down to it, just let the entire damn Bush tax cut expire

This is a winning strategy, but I'm afraid that somehow Obama will fuck it up.

Let everything expire, and then initiate a new (similar tax cut) that's just for the middle class. If republicans fight that, or deny it if it can't be tied to a tax cut for high incomes, then next election cycle it will be their fault that the middle class was fucked over.

That won't happen because by the time it does, the middle class will be defined quite differently. I remember back in the late 80's when the democrat controlled congress wanted a 40% bracket....starting at $60K of taxable income.....

And it wouldn't solve the real issue which is high income people using any loophole they can.

A combination of increasing the capital gains tax to 25% and capping deductions at $30K or so would in fact solve this problem.

marcus says

it will be their fault that the middle class was fucked over

Clinton tax rates aren't a "fucking over".

We need the Clinton tax rates as a starting point sooner or later.

On top of that we're going to need about double their bite on the top 5%.

I really don't see how we're going to grow our way out of this (pensioning off the baby boom and giving them a quality 20-30 years).

We've become very bizarre about taxes. Do you think the Germans enjoy paying their 40.6% to GDP taxes? Sweden and Denmark pay 48-49%.

How do we think this $850B/yr war is going to be paid for? Inflation?