(Plus, this gave me a chance to refresh my CSS and HTML skills ... look mom, I made a data table. That's very nice son, now go outside and play.)
A lot of people before, during, and after the election have asked for the tax rates to go up on the "2%." That's the "millionaires" and the "billionaires." (Just as long as it isn't me!) They gotta pay their fair share. And why not? They can afford it. (I can't.)
President Obama was crystal clear just who that was. It was families making more than $250,000 per year or single people with more than $200,000. That's about 2% of the population (and about 3% of the small businesses). As we've heard so often from the left, they are the ones that benefited most from the Bush Tax Cuts. (The chart below doesn't have exactly those brackets ... but Congress can change the brackets to match Obama's request ... just like they can change all of this ... will they? ... what do you think?)
Let's raise their rates. How much? Well, most agreed at least back to the pre-Bush levels. OK. I think that is about to happen. You see, if congress doesn't act in the next few weeks, then, on January 1, 2013, the Bush cuts expire and the rates on the 2%ers will go up.
Of course, if Congress doesn't act, it will go up on the rest of us too! Here's a chart showing what the rates are today and what they'll be on New Years day.
|Income Bracket||Tax Rate 2012||Tax Rate 2013|
This table applies to single tax payers. Also, this is not gross income, but taxable income which is after deductions and adjustments. Those are the little things that keep our entire Income Tax Preparation Business going. Heck, even the IRS can't usually figure out what you actually owe.
In addition, long term capital gains taxes will increase, some are currently 0%, and some are 5% or 10%. In many cases they will double. (CapGains taxes are really the great tax cut that the rich got, since most live partially or totally on investments and don't earn an income. But they do affect anyone who buys stocks and bonds.)
So all those that wanted to increase taxes on the rich ... you're gonna get your wish ... unless Congress acts ... which is about as likely as me winning the lottery.
Now, of course, as we well know thanks to television advertising, 47% of the people in the US don't even pay Income Tax. That is because, after subtracting personal deductions, itemized deductions, business deductions, tax credits, adjustments, and their great grandfather's social security number, they end up below the $8,700 as a single person or below $17,400 if filing jointly, then you don't owe Uncle Sam a farthing.
But wait, their not off the hook either. It seems that another little tax break expiring at the end of this year is the 2% cut in employee social security tax. That's the "Obama Payroll Tax Cut." Yes, that ends too. Everyone gets a lump of coal in their stocking this year.
Wait ... wait ... there's more. For the people who want to cut spending, I've got good news for you too. At the end of the year a number of large budget cuts will automatically go into effect. You see, many many moons ago, when Congress agreed to raise the debt ceiling, there was a stipulation. A committee was formed to find ways to save money and cut spending. The law said that, if the committee could not agree on cuts, then a number of automatic cuts go into effect on January 1.
Guess what happened? Congress didn't agree. (I know! I'm surprised as you are!!)
So now, starting next year, the following cuts will automatically be made to the budget. The "Accross the Board Automatic Spending Cuts Act" will work. It's called Sequestration ... which I thought had to do with riding horses, but I guess not. Thanks to the "Center for Budget and Policy Priorities," Here is what they call so affectionately "Table 2."
|Table 2: |
Sequestration in 2013 if Appropriations Match 2013 Caps
In billions of dollars
|Resources Before Sequestration||Sequestration|
|Dollar reduction||Percent reduction|
|Funding subject to cap||546||41.1||7.5%|
|War funding, outside of capa||96||7.2||7.5%|
|Unobligated balances from prior years||84||6.3||7.5%|
|Non-Defense discretionary (NDD) programs||535||38.5|
|Veterans’ health and Pell Grants, exempt||74||0.0||0.0%|
|Health centers and Indian health, 2% limit||6||0.1||2.0%|
|Subtotal, funding subject to the cap||501|
|Above-cap funding that is offset by CHIMPsb||19||1.6||8.4%|
|Program integrity and disaster funding, |
outside of cap
|War funding, outside of capa||9||0.8||8.4%|
|Non-Defense mandatory programs that are not exempt||617||16.2|
|Medicare payments to providers and plans, 2% limit||549||11.0||2.0%|
|Other non-exempt mandatory programsc||65||5.2||8.0%|
|Non-Defense Total, Discretionary and Mandatory||54.7|
|May not add due to rounding |
a) Estimates of discretionary resources for 2013 are generally taken from the President’s 2013 budget request. However, we assume that Congress will increase amounts for war funding, since they are not subject to caps, by the amounts necessary to offset the pending sequestration. Thus, the post-sequestration war funding levels will equal the President’s requests. This is not possible for other amounts, which are subject to caps or other constraints.
b) CHIMPs refers to “changes in mandatory programs” accomplished through legislative language in appropriations bills. The president has proposed CHIMPs for FY 2013 that would reduce budget authority by almost $19 billion. Under longstanding scorekeeping rules, this would free up room for almost $19 billion in additional discretionary funding without violating the discretionary caps. That additional $19 billion in discretionary funding will be subject to sequestration, as we show above.
c) The percentage cut in non-exempt mandatory funding of 8.0 percent is smaller than the 8.4 percent cut generally applicable to non-defense discretionary funding. The two percentages would be identical if the basic non-defense sequestration had been allocated proportionally across all non-exempt programs, and if the additional cuts needed to offset the effect of the 2 percent limit on the sequestration of some health programs had likewise been allocated proportionally across all other non-exempt programs. But the Budget Control Act does not work that way. To begin with, the 2 percent limit on the cut to discretionary community and migrant health centers and Indian health is offset only by increasing the cut to other non-defense discretionary (NDD) programs. Similarly, the exemption of Pell Grants and veterans’ medical care from sequestration must be offset by deeper cuts in other NDD programs. Thus, non-exempt mandatory programs do not help offset the exemption for Pell Grants and veterans’ medical care or the 2 percent limit on the cut to discretionary health centers and Indian health. In contrast, the Act specifies that the 2 percent limit on the cut to Medicare is offset by deeper cuts to both non-exempt mandatory programs and non-exempt NDD programs. These rules result in somewhat different sequestration percentages applying to those two categories of non-exempt non-defense programs.
So it is gonna happen folks. Unless Congress takes action in the next three weeks or so, then everyone gets what they want. All the "raise the taxes on the rich" will get just what they asked for and all the "gotta cut spending" bunch will get what they asked for.
I also expect unemployment to increase 1 - 2% and the country to fall back into recession.
And she was practiced that the art of deception
I could tell by her blood-stained hands
Oh, you can't always get what you want
Oh, you can't always get what you want
But if you try sometimes you just might find
You get what you need