Wednesday, December 15, 2010

Merry Christmas Mr. Moneybags...The Bush Tax Cuts are Extended...almost

In this season of giving, there has been a number of brightly packaged deals with bright, satiny bows delivered under the trees of our top 2% of earners in the U.S.  Merry Christmas!

In an article from msnbc, the Senate cleared the "Tax Deal" for passage and now we wait for tomorrow for the House to rubber stamp this legislation.  There are a bunch of people that are really pissed about this deal.  Not the least of which is Mr. McDermott from our little state of Washington.   The opposition to the deal is based somewhat on class warfare in what Mr. McDermott termed "trust fund babies" that were benefiting from this legislation extension.

This deal clearly favors those of our country that have the most wealth but it is completely two faced of Mr. McDermott to classify this legislation as only about the "trust fund babies."

This last week, I had the chance to be the instructor at two CPA continuing education classes in which we discussed the "expiring" Bush tax cuts and the numerous provisions that have controlled the majority of my working lifetime.  In this legislation, Congress created a new 10% tax bracket, lowered the tax brackets of nearly every American, cut our capital gains rates to encourage the transfer of stagnant assets from those that could no longer efficiently use them to those that could squeeze some more beneficial life from them.  In addition to these issues, there were sweeping expansions of refundable credits, including the Earned Income Tax Credit, and the Child Tax Credit, both of which have provided those in the lowest tax brackets not only relief from tax liability, but have made it so they were actually recipients of other's taxable wealth.

I believe it is about time that the Democratic congressional leaders get off this track of thinking everything that was done during the Bush administration was only to benefit the rich and that it is flawed.  The flawed thinking is really in that anyone could possibly think that we can tax ourselves out of this problem.

The old adage, that it takes money to make money is not a trite statement.  If our government is taking money out of the public, when the economy has struggled so mightily in the past, how is the public going to have the funds necessary to rebuild?  Yes, there are greater benefits to those that already have wealth, but my fledgling little business really cannot afford to give Uncle Sam another 5% of my income this next year.  I'm cut thin and this extension means I may have the little wiggle room that I need to start climbing out of this mess.

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