Sunday, October 3, 2010

Taxes Going Up As The Bush Tax Cuts Go Down

Official Presidential Portrait of United State...Image via Wikipedia
There were two major tax cutting bills enacted during President Bush's administration. They were the Economic Growth and Tax Relief Reconciliation Act of 2001 and the Jobs and Growth Tax Relief Reconciliation Act of 2003. These two pieces of legislation are what we call the "Bush Tax Cuts". The bills included across the board tax relief for American taxpayers. They will expire as of December 31, 2010. 
 
Exactly what will the loss of these tax cuts mean to you and me? 
 
Tax Brackets 

Tax brackets that are currently 10%, 15%, 25%, 28%, 33% and 35% will go up to 15%, 28%, 31%, 36% and 39.6%. This means that if you are in the 10% bracket your taxes will increase by half to 15%. What happened to helping the lower and middle class? 
 
Marriage Penalty 
 
Remember when the marriage penalty was such a hot topic in the news, well the Bush Tax Cuts fixed it. But now it's going back to the way it was, when a couple living together was paying less taxes. Married couples will have to pay more than single couples. 
 
Child Tax Credit 
 
The current child tax credit is $1000. This will fall back to $500 in 2011. Also eligible families will decline. 
 
Dividends and Capital Gains 
 
The tax rate on dividends is currently 15%. It will climb to a range of 15% to 39.6%. Capital gains top rate will climb from 15% to 20%. 
 
Estate Tax 
 
In 2010 there is no estate tax. But in 2011 it returns with a exemption of $1,000,000 and a tax bracket of 55% 
 
The Tax Foundation estimated that the median family of four saved about $2,200 in taxes under the present plan. These cuts will vanish with the next tax year. 
 
I can't reconcile any of these tax cuts as unnecessary. They effect all tax payers of every age. I can't see giving the government more of our money when the budget is out of control. When our money is wasted at every turn it unconscionable to allow them more money. Cut the budget 10% and leave us alone. 
 
Not making these tax cuts permanent will be the final nail in the Obama Administration. The damage done will echo for years to come. 


4 comments:

  1. Hey,

    I just came across your blog..but didn't get to know you name. You have some good finance and investing content on your blog!

    Anyway, I think you are not too late to start this blog and start investing...many people don't even take the action to start the 1st step.

    I'm not too sure how it works in U.S but seems like the taxes are posting a bit of problems for people in the U.S?

    ReplyDelete
  2. To me the nation's tax system needs a major overhaul to simplify it and make it more fair, especially for married couples. But I wouldn't trust the current set of jokers in office to watch my dog for the weekend, much less undertake anything so major. Without a doubt they would screw it up to the point that it is worse than what we have today.

    ReplyDelete
  3. Daniel, Thanks for the kind words

    Grouch, I agree. But its possible we could have a VAT tax, which I completely see as not for Americans, let the Europeans keep it.

    ReplyDelete
  4. I'd trade the VAT for a Constitutional amendment that repealed the income tax (the Constitutional amendment would have to come first), but I do not want both at the same time. The more money you give these jokers in Washington the more money they will spend.

    ReplyDelete

Join 1000's of People Following 50 Plus Finance
Real Time Web Analytics