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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: combjelly who wrote (588573)	10/5/2010 10:39:13 AM
From: Bill	Read Replies (1) \| Respond to of 1572561

Democrats Abandon the Field With Trillions in Tax Increases Looming from Power Line by John It is remarkable that the Democratic Congress has adjourned without taking any action with regard to the tax increases that will occur on January 1, 2011. No doubt the Democrats expect they will slink back into Washington after the election and selectively block tax increases on behalf of their favored constituencies. Still, it is rather stunning that they are willing to face the voters in four weeks with trillions of dollars in tax increases pending. The Hill sums up what is at stake: >>> If Congress does nothing on taxes by the end of the year: - The estate tax will return to pre-2001 levels, socking estates worth more than $1 million with a 55 percent tax. - The capital gains tax on most assets will jump from 15 percent to 20 percent. - Dividends currently taxed at 15 percent will skyrocket to individual tax rates that go as high as 39.6 percent. - The Making Work Pay tax break will cease to exist. - The Alternative Minimum Tax will hit the middle class for 2010 tax returns. - A slew of tax breaks that expired last year, including credits for research and development expenses and relief for college tuition, will not be available for 2010 tax returns. - The Child Tax Credit will revert from $1,000 to $500. When combined with inaction on the Bush tax cuts affecting marginal rates, taxpayers would be hit with a tax increase that easily tops $4 trillion over the decade if all the tax issues are untouched.

To: combjelly who wrote (588573)	10/14/2010 3:40:34 PM
From: TimF	1 Recommendation Read Replies (1) \| Respond to of 1572561

Taxes aren't going up by 40% for anyone. They aren't going up by 40 percentage points for anyone. And probably not, as a result of the expiration, even 40% (which is a far smaller increase, if you pay 30% taxes, a 40% increase would only be an increase to 42%, not to 70%). But people will pay the 40%, and that 40% impacts their decision making. You can break taxes down in to any number of tiny parts. You can say "no one is going to change their behavior for an extra one percent of tax", but that's not actually true. If it was literally true than you could keep increasing taxes by a one percent until the tax was 100% with no impact on people's decisions. Each small bit of increase puts some new people at the margin, and they are the one's who change their behavior. Its unlikely to be a smooth curve, with every 1% increasing being equal to all others. But neither is it the case where there is no impact until the taxes are at some specific very high level. he proposal is to take it from 36% to 39% for incomes over $250k A new or increased phase out of deductions at around the same point pushed the marginal tax rate at that point up to the low 40s. Which for most affected by the tax is going to be far less than even 3% since the first $200k or $250k is still taxed at a lower rate. Which isn't a major point in terms of incentives since the marginal dollar will get taxed at 39 percent or more. And we all remember how crappy the economy was from 1994 to 2000... Because of course tax rates are the only thing that impacts the economy, and if the economy is good after some changes in tax rates, that change automatically had to be good for the economy... So tax cuts have to be good, since the economy did well after Reagan's tax cuts, tax increases have to be good, since the economy did well after Clinton's tax increase. I guess changing the tax rates is good for the economy, why not do it every day, then the economy will zoom to the moon (if we follow your logic).