So what do you think will happen with taxes?

Meadmaker

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Meadmaker
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George W. Bush set in motion what should be some interesting political theater. Ten years ago, he passed a tax bill with a sunset provision. If Congress does nothing, our taxes go up, fairly substantially, especially at the upper incomes and for families with children.

Now we have a very odd situation. Democrats probably won't want to be pinned with the blame for the tax increase. Republicans are powerless to stop it unless the Democrats join in. There will be lots of posturing and blame to go around.

Here's what I suspect will happen. At some points, the Democrats will introduce tax cut legislation. (That's what they will call it, with some justification. It will tax people less than if they did nothing.) They will call for keeping the portion of the GWB tax cuts that affects the Democratic base working families. This won't be good enough for the GOP who will want to prevent any tax increase. The GOP won't support the plan and will try to block it. If successful, that will have the effect of blocking a tax cut. If unsuccessful, it will make the Democrats look like the good guys who passed a tax cut.

Of course, they could just compromise and do something sensible, but I don't see that happening. I think the GOP will find a way to shoot themselves in the foot and look stupid, thinking that they are going to push blame on Obama and the Democrats.
 
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I think we should go to the same tax rates we had 20 years ago.
 
GreNME said:
I think we should go to the same tax rates we had 20 years ago.
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Make that 32 years, before old Jelly-brain dropped them on the rich and started sticking it to the working class.

The Dems have already put forward a reduction for everyone under $250K. They should circle the wagons for a die-in-place fight, and refuse to listen to those idiots Bohner and McConnell when they shriek about how much the fat class neds their relief from inheritance and cap gains taxes.

Somebody has to pay for the care of the veterans and the repair of our infrastructure. Let the GOPers have to go back and explain to their constituents why they think the working class has to pay a bigger proportion of their income toward that end than do the Walton larvae.
 
Loss Leader said:
I think this is about the estate tax. My guess: $7.5 million.
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I think that it needs to kick in at around $5 million, and should be graduated so that we do not, in another 50 years, see Walmart owning 90% of all retail businesses nation wide.
 
GreNME said:
So this thread is about a tax that is likely to never affect 90+ percent of the US population?
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No, this thread is about taxes that will affect every single person who pays taxes now, and quite a few people who pay no taxes now.

If Congress does nothing, the lowest marginal rate will increase from 10% to 15%. That affects the first $10,000 of taxable income, so most taxpayers will pay 500 dollars more as a consequence. The per child tax credit will be cut from 1000 dollars to 500 dollars. That means a 500 dollar tax increase per child. In other words, even people with low incomes will be hit with a tax increase.

The standard deduction will be cut, which will affect a lot of people at low incomes.

For people with high incomes, the effects are, of course, more dramatic. Tax rates go up all across the board, moreso at high incomes.

So, that's what happens unless Congress passes, and the President signs, new legislation. If the Democrats try to pass a new plan, but the Republicans block it, income tax rates go back up to where they were during the Clinton years.

So, the point of this thread is to ask what people think will happen as the next few months come and go and the elections approach. This issue hasn't been a hot button topic for some reason, but the right wing radio is starting to chat up about it. Of course, the Republicans will talk about how Obama is raising taxes, but technically that's not true. George W. Bush is raising taxes. He wrote the law.

Nevertheless, Obama is in charge now, and Congress is controlled by Democrats, so the ball is in their court. I think what they will do is write new legislation that preserves the portion of the Bush tax cuts that are aimed at lower incomes, but lets the higher margin rate cuts expire, thus raising taxes on the wealthy and the high end of the middle class.. The GOP will try to block this plan, but if they filibuster, they end up raising taxes even more than if they don't.

The GOP is in a difficult position. If they do nothing or block the Democratic plan, they could get blamed for a huge tax increase. They don't have the votes to do what they want. They either have to let the Demcrats have their way, or get a plan that they find even worse. Should be interesting.

Here's a link with a bit more info:

http://www.businessweek.com/magazine/content/10_30/b4188036338182.htm
 
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Beerina said:
Because stagflation was such a wonderful thing.
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The Reagan tax cuts did nothing to address stagflation, any more than the Reagan tax cuts are the reason that the Steelers stopped appearing in the Superbowl for twenty-odd years.

Stagflation was dealt with by the inflation hawks at the Fed under the leadership of Paul Volcker. Who, I hasten to point out, was a Carter appointee.
 
I support higher taxes (Middle Class and above) but this thread is asking what I think will happen. I agree with Meadmaker's prediction in the Dems will propose cuts relative to where taxes would be after the Bush tax cuts expire. The Dems will portray them as cuts, the Republicans will portray them as tax increases no matter the truth.

Dems could propose taxes lower than today's rates and I guarantee that the Republicans would still portray it as tax increases through some loophole or another.
 
The Central Scrutinizer said:
WTF?
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Wealth concentrates. If you have $10,000 in the bank, you probably need most of it in cash for living expenses and emergency reserve. If you have $100,000 in the bank, you probably have somewhat higher living expenses but can probably still invest half of it. If you have $100,000,000 in the bank, then a) you need a better financial planner, because b) you can almost certainly invest the lion's share of it.

That's one reason that companies tend to grow. Any successful competitor of Wal*Mart, Google, or Microsoft is likely to find itself absorbed into the larger firm. And if the larger firm decides to extend its reach -- if Wal*Mart decides that it wants to go into the restaurant business, for example --- it can typically achieve a huge market share very quickly by either buying firms or else simply driving them out of business via loss-leaders. (As a historical example, look at how Sam's Club bought out The Wholesale Club.) But it's also a reason that personal fortunes tend to grow as well; I don't need to use a corporation to amass a real estate empire. I just need to keep buying property, one lot at a time, as long as I don't sell any of it.

Left unchecked, this tendency would lead to monopolies and other bad social effects; one of the historical defences against this tendency is inheritance tax. Essentially, once a generation (approximately every 30 years), large estates need either to break themselves up into smaller pieces, or else to divest themselves of a fair amount of their holdings in order to pay the tax on the rest. (That's one of the reasons that Congress imposed the Generation-Skipping-Tax [GST] as well; it keeps me from avoiding inheritance tax by leaving everything for my granddaughter instead of to my daughter who leaves it to my granddaughter.)

(If you want to see what the effects of acquisition without periodic divestiture looks like, just try to buy property in central Oxford, where the University has been buying every lot that comes up for several centuries.)
 
I just wish tax cuts were actually reductions in the total income tax, and not "credits" for things not everybody has. I don't have kids, I don't own a house, so all these marvellous "tax cuts" other people get don't benefit me. In fact, my taxes seem to go up every year, even when they talk about all the cutting that happened. Ironically, if I were rich enough to buy a house, I'd pay less in tax because of the deductions--so to reduce my tax burden I just need to have more money and assets. That seems sort of backwards to me.
 
If Wal Mart were left to grow unchecked, what are the chances of anyone's being able to open an independant retail store anywhere within easy driving distance?
 
TragicMonkey said:
I just wish tax cuts were actually reductions in the total income tax, and not "credits" for things not everybody has. I don't have kids, I don't own a house, so all these marvellous "tax cuts" other people get don't benefit me. In fact, my taxes seem to go up every year, even when they talk about all the cutting that happened. Ironically, if I were rich enough to buy a house, I'd pay less in tax because of the deductions--so to reduce my tax burden I just need to have more money and assets. That seems sort of backwards to me.
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Well, that's sort of the point.

Homeownership is generally good for the country. Congress recognized that and set up the tax laws to encourage homeownership. You're supposed to notice that owning a house will reduce your tax burden, and save up for a down payment as a result.

(And how rich do you have to be to own a house? I don't know where you are, but most parts of the United States -- outside of the really silly metropolitan areas -- have houses available for on the order of $20,000, and livable houses for less than $50,000, which means that you can buy them quite comfortably on a salary of $20,000 a year or less. Here's an example from the Austin, TX area. It's not exactly the nicest neighborhood, and it's not Bucking-huge Palace, but it's not like it's a foreclosure with the roof caving in.)
 
Meadmaker said:
Nevertheless, Obama is in charge now, and Congress is controlled by Democrats, so the ball is in their court. I think what they will do is write new legislation that preserves the portion of the Bush tax cuts that are aimed at lower incomes, but lets the higher margin rate cuts expire, thus raising taxes on the wealthy and the high end of the middle class.. The GOP will try to block this plan, but if they filibuster, they end up raising taxes even more than if they don't.

The GOP is in a difficult position. If they do nothing or block the Democratic plan, they could get blamed for a huge tax increase. They don't have the votes to do what they want. They either have to let the Demcrats have their way, or get a plan that they find even worse. Should be interesting.

Here's a link with a bit more info:

http://www.businessweek.com/magazine/content/10_30/b4188036338182.htm
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The article suggests the Democrats will likely have to extend the entire package of tax cuts. So whence comes this notion that they're going to pull off this spectacular finesse where they keep the tax cuts for the lower, middle and upper-middle classes, dump the tax cuts for the rich, and manage to blame the GOP for the latter?
 
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