The 2013 Tax Cliff

Discussion in 'Politics' started by Wiseacre, Sep 15, 2011.

  1. Wiseacre
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    Wiseacre Retired USAF Chief Supporting Member

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    This information is from an op-ed in yesterday's (9/14/11) WSJ, regarding Obama's Job Plan, hereafter called OJP. Obama said he wants $240 billion in tax incentives for workers and small businesses that are temporary and will expire in Jan 2013. The taxes increases he wants to impose however, are permanent. Such as limiting tax deductions for those earning more than $200k and raising their tax rate. So, on Jan 1, 2013, here's what the OJP will mean to small business owners, the ones who create 70% of all new jobs that we desperately need:

    We already know Obama wants to raise taxes on the earners making over 200k. But Congress's Joint Committee on Taxation found in 2009 that $437 billion of business income would be taxed at a higher rate if the Bush tax cuts for the rich are allowed to expire, which includes some 4.5 million small business owners who file as subchapter S firms. So we're talking about raising taxes on many of the same people that Obama wants to give a temporary payroll tax cut to. Think about it - temporary tax cut but a permanent tax hike. Yeah, that'll create a lot of new jobs.

    Then there's the increase in capital gains and dividends taxes, rising to 20% from 15%, again starting in Jan 2013. These taxes are the most injurious to economic growth of any tax hike. (My opinion).

    Plus, Obama wants to cap itemized deductions and exemptions on the same rich guys, which takes out $405 billion from the private economy over 10 years, starting in 2013. This coincides with the expiration of the tax credits, expensing provisions, and payroll tax breaks inthe OJP. That's a hit on small businesses and workers of $240 billion when the temporary incentives go away.

    Also - in 2013 ObamaCare has an additional 0.9% increase in Medicare taxes, again only on the rich guys, and a 2.9% surcharge on investment income, including interest income. So now your capital gains and dividends tax rate has risen from 15% to 23.8%.

    All of this on the small business owners and investors, the ones who will create the most jobs. It's just insane to think this can work, if I were a small business owner or thinking about starting one, there's no way on God's green earth I would consider it until Barack Obama is out of office.

    All you lib/dems screeching about demand, all we need is more demand. Well guess what, you ain't getting more demand on a sustained level without more jobs, and the OJP just ain't going to deliver anything more than a temporary bump that will turn south in a big way come Jan 2013. Only a complete fool would think otherwise. Or maybe a completely biased ideologue.
     
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    Last edited: Sep 15, 2011
  2. Grampa Murked U
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    Grampa Murked U Diamond Member

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    Yep, lots of new taxes on top of obamacare taxes on top of the expiring Bush cuts. And no one sees the big red sign that says......


    BRIDGE OUT AHEAD!
     
  3. Polk
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    Polk Classic

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    You guys really need to make up your mind on if you want the budget balanced or not.
     
  4. Polk
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    Polk Classic

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    It's really weird that you guys always want to talk about the "expiring Bush cuts", as if Obama hadn't already agreed to making the full value of them permanent for something like 98% of the population.
     
  5. Grampa Murked U
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    Grampa Murked U Diamond Member

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    LOLOLOLOL

    RIDDLE ME THIS...

    How do tax increases that are already used up by new spending (ocare,jobs bill, etc) ever going to lower our debt? THEY CAN'T AND WON'T BECAUSE THE MONEY IS SPENT BEFORE IT'S EVER COLLECTED.

    The only way we will EVER lower our debt will be to make serious cuts in spending.
     
  6. Polk
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    Polk Classic

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    I didn't say reduce the debt. That being said, we can't realistically balance the budget with spending cuts alone.
     
  7. Grampa Murked U
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    Grampa Murked U Diamond Member

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    Controlling spending is the first step. Before I would ever believe congress intends to use our money in a fiscally sound manner why would I ever feel it right to just blindly give them more?
     
  8. signelect
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    signelect BANNED

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    Cute tie Polk, on the surface it appears you might be a professional but your arguments don't seem all that professional. You can balance a budget by reducing spending, my wife and I do it all the time. If we don't have the money we don't buy.

    Stop funding jobs for congressman's families, stop paying of their campaign contributions with crony money, stop building airports where they is low demand, are you starting to see the pattern.

    This is not a Pub or Dem issue it is a congressional issue. They have gotten away with it for so long it seems like the right thing to do. A good example is Social Security. This money was to a trust fund where it would be held for me until I retire. Under good old Johnson congress took the money to spend on their pet projects. They STOLE my money. If it was a private corporation they would have gone to jail.

    It this simple enough for you.
     
  9. Polk
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    Polk Classic

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    I know it's fun to talk about "waste, fraud, and abuse", but do you really think the entirety of the budget falls in those three categories? The reality is that if we keep taxes at the current level (and note, Republicans are calling for even more tax cuts), we'd have to make radical spending cuts to balance the budget.

    Since 2010 is the most recent year I have a detailed breakdown easily available for, I'll use it to illustrate the point (if anything, it would require deeper cuts today due to more debt service). Assuming you're not going to default on the national debt, eliminating all non-defense discretionary spending and then cutting everything else by 15% would still result in a small deficit (about 55 billion). If you make the choice to fully fund Medicare, Social Security, and defense spending, you'd still need to zero-out non-defense spending while cutting unemployment benefits and Medicaid by 45%.
     
  10. Wiseacre
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    Wiseacre Retired USAF Chief Supporting Member

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    Look, business people and investors are smart enough to do the math, they ain't stupid. You give somebody a temporary tax break for what, 15 months and then whack 'em for a big tax increase after that and think they're gonna go out and hire people? Not knowing how much healthcare costs are going to go up, not knowing what the energy costs will be cuz we don't have an energy plan? Not knowing what the EPA or NLRB is going to do while Obama is in office? Not knowing what the real costs of Dodd/Frank is going to be or the avalanche of regulations coming their way?

    Taxes aren't the only factor involved with the decision to hire people or start a new business. But the tax policies being advanced by the president just don't indicate any change in the business climate in this country until he's out of office. You can try all the temporary jobs programs you want, but when the work is done then the job will be over. And you're back where you started but with a higher national debt.
     

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