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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
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.
Hey,
ReplyDeleteI just came across your blog..but didn't get to know you name. You have some good finance and investing content on your blog!
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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?
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.
ReplyDeleteDaniel, Thanks for the kind words
ReplyDeleteGrouch, I agree. But its possible we could have a VAT tax, which I completely see as not for Americans, let the Europeans keep it.
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