Entries in Bush Tax-Cuts (4)


Tax Hikes if Congress Does Not Act

Hemera/Thinkstock(WASHINGTON) -- Congress crossed one item off its tax to-do list last week after passing an extension to the highway excise taxes, which funds transportation projects and without which all federal highway projects would have come to a screeching halt last weekend.

One down, 47 more to go.

If Congress does not act by the end of the year, nearly 50 items in the tax code will expire, sparking tax hikes for nearly every income-earner in America.

"All the tax rates for virtually every taxpayer will go up," said George Yin, the former chief of staff at Congress' Joint Committee on Taxation. "In terms of [Americans] planning and thinking about their lives next year, all of these things would potentially have an impact."

Here's a look at a few ways federal taxes are set to increase unless Congress intervenes.

On Dec. 31, one of the most extensive tax cuts in a generation -- the Bush tax cuts -- are set to expire.

If they are not extended -- as they were for two years in 2010 -- about 60 percent of tax filers would see their income tax rate increase between three and five percentage points, meaning a couple that makes $90,000 per year would pay an extra $2,700 in federal income taxes.

Some taxpayers would lose an additional $500 when the child tax credit, which was doubled to $1,000 under the Bush tax cuts, slides back to a $500 credit per child under the age of 17.

Luckily for the majority of taxpayers, both parties have said they want to extend at least part of the Bush tax cuts. Republicans are aiming for a full extension while Democrats are trying to extend them only for families that earn less than $250,000, or about 98 percent of the population.

"The odds are that Congress will take action to prevent most of the scheduled tax increases," Yin said.

But, Yin added, just how much of the tax cuts will still be around this time next year is "partly of function of who's in office, who wins the election, and partly a function of the current budgetary cost the economic situation."

Another big portion of the expiring Bush tax cuts are reductions on investment income. If the current rates expire, the tax rate for capital gains would increase from 15 percent to 20 percent and dividends would be taxed as normal income, instead of the current 15-percent rate.

With investment taxes possibly going up, Roberton Williams, a senior fellow at the Urban-Brookings Tax Policy Center, suggested that investors might want to make some changes.

"If you want to sell an asset and have a capital gain, you're better to sell it this year than next year because the capital gains tax will be higher next year if tax laws play out as they currently stand," Williams said.

The opposite is true for giving money away. Williams said people may want to wait until next year to give away large sums of money "because the benefit from the deduction is greater if your tax rate is higher," which it could be if the Bush tax cuts are allowed to expire.

While the last fight over extending the payroll tax holiday ended a mere month ago, Congress will have to jump back into the ring again before the end of the year if it wants to prevent a two percentage point tax increase on 160 million workers.

The two point reduction in payroll taxes, which fund Social Security and Medicare, was originally passed in 2011 as a one-year tax break. It was extended through 2012, but with a hefty $143 billion price tag, the payroll tax holiday is a prime target for budget-conscious congressmen.

With the presidential election looming barely more than a month before these major tax breaks are set to expire, any compromises Congress strikes are likely to come down to the wire.

But with the economy still in a relatively fragile recovery, Andrew Moylan, the vice president of government affairs for the National Taxpayers Union, said he "wouldn't bet that everyone's taxes are going to go up."

"There is pretty broad agreement about extending most of the Bush tax cuts," Moylan said. "But the real question is whether Congress is going to extend the lower payroll tax."

Williams, from the Tax Policy Center, said the fate of taxes are about as predictable as the fate of the presidential election.

"I think all bets are off with regards to what this Congress is going to do," he said.

Copyright 2012 ABC News Radio´╗┐


Jon Huntsman Supports 'Sacrifice' from the Wealthy

LIU JIN/AFP/Getty Images(WASHINGTON) -- Depending on where you stand, former Utah Gov. Jon Huntsman is either the gutsiest contender for the Republican presidential nomination or the nuttiest.

Huntsman told PBS' NewsHour Thursday that if he defeats President Obama in November 2012, he will "call on a sacrifice from all of our people, even those at the very highest end of the income spectrum."

That would put Huntsman more squarely in line with the incumbent who contends that "shared sacrifice" is the only way to get the nation's fiscal house in order.

While Huntsman, an ambassador to China in the Obama administration, did not repeat the president's demand to end Bush-era tax cuts for the rich, the implication was there.  That would certainly put him at odds with all the other contenders for the White House, who insist that any tax hike will hurt job creators, namely, the wealthy and corporations.

Huntsman has been moving decidedly to the center in an effort to get noticed.  However, he is barely showing up in the polls, generally finishing at the bottom.

Copyright 2011 ABC News Radio


House Democrats Reject Obama-GOP Tax Deal

Photo Courtesy - Getty Images(WASHINGTON) -- House Democrats voted Thursday to reject a controversial tax deal brokered between President Obama and the incoming Republican leadership, highlighting the growing rift inside the president's own party.

By voice vote, House Democrats overwhelmingly passed a resolution Thursday that said the tax package should not come to the floor of the House for consideration.

"When faced with take it or leave it, we'll leave it," said Rep. Lloyd Doggett, D- Texas, after leaving the heated closed-door meeting of the caucus.

The proposed package would extend the Bush tax cuts across incomes, extend benefits to the unemployed, and cut payroll taxes.

"In the caucus today, House Democrats supported a resolution to reject the Senate Republican tax provisions as currently written," said House Speaker Nancy Pelosi.

"We will continue discussions with the president and our Democratic and Republican colleagues in the days ahead to improve the proposal before it comes to the House floor for a vote."

Rep. Peter DeFazio, D-Ore., said the vote to reject the deal "was nearly unanimous."

Democrats, he said had a "large number of objections and concerns" with the proposed plan.

The surprise insurrection against the president seems motivated mostly by anger at extending cuts to the wealthiest Americans and a provision that would raise taxes on inherited income -- the estate tax.

"The caucus has no clue as to how that got included," Rep. Charles Rangel, D-N.Y., told ABC News, referring to the estate tax provision in the deal.

Some Democrats also argue that the plan would add $700 billion to the national debt.

Those additions were a bridge too far for Democrats, who said they would only consider the proposal if it was changed.

As of this morning there were just over 50 House Democrats who said they would vote down the proposal if it came to the floor, but most observers expected it would come to a vote.

Copyright 2010 ABC News Radio


'We're Not Going to Raise Taxes on Anybody': GOP Leaders Rip House Vote on Tax Cuts

Photo Courtesy - Getty Images(WASHINGTON) -- Republican leaders in Congress Wednesday ripped House Democrats for holding a politically-charged vote Thursday on extending the Bush tax cuts for middle-class Americans but letting them expire for the wealthy at year’s end.

“I think it’s wrong,” said House Speaker-to-be John Boehner. “It does undercut the conversations we had just yesterday to continue to play political games. The American people said on election day, ‘Stop the games. Stop the spending. Stop the looming tax hikes.’”

That argument was echoed by the Senate’s top Republican Mitch McConnell. “Regardless of what the majority tries to force House Republicans to do, it’s not going to go anywhere,” McConnell said. “We are going to extend the current tax rates. We’re not going to raise taxes on anybody. The only thing we’re discussing now is just how long that extension will be.”

McConnell and Boehner were speaking at a brief press conference following a meeting Wednesday evening with Republican governors-elect on Capitol Hill.

The Bush tax cuts are due to expire on December 31 unless Congress extends them. Republicans want a permanent extension of all the tax cuts, while Democrats want to extend the cuts only for individuals making under $200,000 a year and couples making under $250,000 a year. One option seen as an increasingly likely outcome is both parties agreeing on a temporary three-year extension of all the cuts in exchange for key Democratic priorities like an unemployment insurance extension and other possible measures.

Wednesday on Capitol Hill, representatives from the Obama administration and Congress started a series of meetings to resolve the issue.

The White House-Congress tax meetings kicked off Wednesday morning with a summit on Capitol Hill that lasted over an hour and a half but left little clues about how both parties intend to resolve the issue of the expiring Bush tax cuts.

Copyright 2010 ABC News Radio ´╗┐

ABC News Radio