Tax Hike Prevention Act of 2010: How It Affects You
Now that President Obama has signed the Tax Hike Prevention Act of 2010, taxpayers will have some certainty about their tax situation, if only for the next 24 months.
The new law contains a bevy of tax breaks — new and extended — and emergency help for the jobless. Its cost over 10 years is estimated at $858 billion.
Here’s a rundown of some of the biggest ticket items that will affect individuals. (Except where noted, all provisions are for 2011 and 2012).
Extended income tax rates: $207.5 billion. The six federal income tax rates will remain at the same levels they are today: 10%, 15%, 25%, 28%, 33% and 35%. In addition, itemized deductions will continue to be allowed in full for high-income taxpayers.
AMT fix: $147 billion. More than 20 million tax filers will be protected from having to pay the so-called “wealth tax,” otherwise known as the Alternative Minimum Tax. For tax year 2010, the bill will raise the amount of income that is exempt from the reach of the AMT to $47,450 for individuals and to $72,450 for couples filing jointly. In 2011, those exemption amounts will increase to $48,450 and $74,450 respectively. In addition, the bill will allow taxpayers to apply nonrefundable credits (which reduce one’s tax bill dollar for dollar) to their tax liability — whether under the AMT or the regular tax code.
Social Security tax break: $112 billion. Workers will get a 2 percentage-point break on their payroll tax for one year. Instead of paying 6.2% on wages up to $106,800, they will only have to pay 4.2% in 2011. This tax break replaces the Making Work Pay credit, which expires this year. Unlike Making Work Pay, which was limited to workers making less than $75,000 ($150,000 for couples), the payroll tax holiday will be available to everyone who pays into Social Security.
Expanded child tax credit: $90 billion. The bill will retain the $1,000 child tax credit (up from $500 before the Bush tax cuts). It also will retain the reduced-earnings threshold, which allows more people to claim the credit as refundable. A refundable tax credit is one paid to a tax filer even if the value of the credit exceeds his tax liability. So if a filer doesn’t owe any federal income tax but qualifies for the credit, it is paid to him in the form of a refund.
Smaller estate tax: $68 billion. Barring any changes, the estate tax in 2011 and 2012 will be reinstated at an exemption level of $1 million and a top rate of 55%. But under the bill, the exemption level will be raised to $5 million and the top rate lowered to 35%. The legislation will also reinstate the so-called “step up in basis” for beneficiaries of those who die in 2010, 2011 or 2012. A stepped-up basis means that when someone sells an inherited asset, his capital gains tax bill will be based on the asset’s price the day he inherited it, rather than when the decedent originally bought it. Practically speaking that means the beneficiaries of those who died in 2010 will be allowed to choose which estate tax rules to follow — those of 2011 or those of 2010. Under 2010 rules, there is no estate tax but also no step-up rules; there is only an option to exempt $1.3 million worth of capital gains from tax.
Help for the jobless: $57 billion. The unemployed will get a 13-month extension of the deadline to file for additional unemployment benefits — which go as high as 99 weeks in states hit hardest by job loss.
Extended investment tax rates: $53 billion. Everybody will get to keep their low investment tax rates for the next two years. For most people, that means their qualified capital gains and dividends will continue to be taxed at 15%. Low-income tax filers (those in the 10% and 15% brackets), however, will continue to enjoy a 0% tax rate on their capital gains or dividends.
Marriage penalty relief: $27 billion. Marriage will still be hard (sorry), but not because less-than-wealthy two-earner couples will owe more to the IRS than they did when they were single. The bill continues to ensure that the standard deduction for couples is exactly twice that for single filers. It also maintains an expanded 15% tax bracket so that the amount of income in that bracket for joint filers is exactly double that for single filers.
Expanded college credit: $18 billion. Paying for college tuition in 2011 and 2012 will be made a bit easier with the retention of the American Opportunity tax credit, which is an expansion of the HOPE tax credit. The Opportunity credit is worth up to $2,500 (up to 100% of the first $2,000 spent and up to 25% of the next $2,500), and it may be claimed for four years’ worth of college. Eligibility to take the credit is limited to those with modified adjusted gross income below $90,000 ($180,000 for couples filing jointly).
Individual tax break extensions: Costs vary. The legislation will extend a number of tax breaks that have been introduced in the past few years such as the option to deduct on one’s federal return state and local sales tax instead of state and local income tax — at a cost of $6 billion. Also, it will extend a deduction for qualified tuition and other education-related expenses at a cost of $1.2 billion. Less pricey extensions include a break for teachers to deduct up to $250 in classroom expenses (just under $400 million).
By: Jeanne Sahadi, Senior Writer-CNNMoney.com, December 17, 2010
Obama’s Silent Majority
Preident Barack Obama
Preident Barack Obama
You’d never know it from cable news, but the average liberal Democrat actually likes the job the president is doing
Everyone knows that progressives have been growing increasingly disillusioned with Barack Obama since, well … even before he took office. He’s compromised too much, fought too little, sold out on one big issue after another, and fallen horribly, tragically short of the transformational goals that defined his 2008 campaign.
And now that he’s gone and cut a deal with Mitch McConnell (of all people!) to keep the Bush tax cuts in place for the wealthiest Americans for the next two years (at least), the left’s anger is louder than ever. No wonder Time’s Mark Halperin says the president’s base is “shattered.” And no wonder the media is filled with speculation about a potential challenge to the president in the 2012 Democratic primaries. Really, has there ever been a president who’s succeeded so thoroughly in taking the very people who put him in office and turning them against him?
It’s a fun topic for cable news and the blogosphere, where liberal commentators and activists routinely brand the president a Judas and threaten to support a primary challenger in 2012. And it’s a fun topic in the “mainstream media,” which takes all of this racket as confirmation that Obama is rapidly losing — or has already lost — his base.
There’s just one problem: The premise on which all of this is based is totally and completely wrong. Liberal commentators and activists and interest group leaders may be seething over Obama, but their rage has not trickled down to the Democratic voters (and, in particular, the Democratic voters who identify themselves as liberals), even though they’ve been venting their grief for the better part of two years.
As I noted earlier this week, Obama’s approval rating among Democrats has held steady at or near the 80 percent level throughout all of the turmoil of 2010. This puts him in as strong a position with his own party’s voters as any modern president has been at this same point in his presidency (with the exception of George W. Bush, whose numbers remained unusually high for well over a year after 9/11). Look closer and you’ll also find that Obama’s approval rating among Democrats is actually highest among those who call themselves liberals — an 83 percent score in the most recent round of Gallup polling, completed a few days ago. Among moderate Democrats, he clocks in at 75 percent, and among conservative Democrats, 69 percent. Again, these numbers have more or less held steady all year. To the extent Obama has a serious problem with Democrats, then, it’s with those who are on the right, not the left. This is hardly what you’d expect for a president who, according to the dominant narrative, has spent his presidency poking a stick in the left’s eye by cutting deals with conservative Democrats and Republicans.
Obama, in other words, seems to have developed his own silent majority. Rank-and-file liberal Democrats may not agree with everything he has done, but they do not share the sense of abandonment and betrayal that has defined liberal commentary throughout so much of his presidency. The party’s liberal base still very much likes him; it’s the elites who have turned on him.
The biggest reason for this disconnect, I would suggest, is that the liberal Democratic base liked Obama, both personally and ideologically, from the very beginning. Virtually from the moment he electrified the 2004 Democratic convention, liberals latched on to him as one of their own — and they haven’t (and don’t want to) let go.
This is not an unheard of phenomenon in politics, and it’s one of the reasons I’ve been so keen on comparing Obama’s political appeal to that of Ronald Reagan. Rank-and-file conservatives felt as strongly about Reagan in the 1980 campaign (and in 1976, for that matter) as liberals did about Obama in 2008. And they stayed true to him even when conservative elites concluded two years into his term that Reagan was a sellout.
Indeed, in the wake of this week’s drama over the Bush tax cuts, it’s worth recalling a similar moment in Reagan’s presidency, when congressional Democrats forced him into a tax hike in the summer of 1982. Like Obama now, Reagan had no leverage: The economy was spiraling out of control, voters were abandoning him, and Democrats were having great success (or seeming to have great success) hammering him over the exploding deficit. Thus did Reagan agree to a tax hike package that increased revenues by nearly $100 billion over the next three years — the largest tax increase in history, right-wing activists and commentators screamed. To these conservative elites, it was simply the latest act of betrayal by their one-time hero. When the GOP was drubbed in that fall’s midterms, they claimed vindication (see — not conservative enough!) and talked openly of challenging Reagan in the 1984 primaries. But rank-and-file conservative voters didn’t listen. They still liked the Gipper, still thought he was one of them, and still backed him in polling. It’s the same story today for Obama with rank-and-file liberals.
If Obama had been introduced to the Democratic base differently — that is, if they’d been suspicious and resistant to him and he’d landed in the presidency in spite of their skepticism — the objections of liberal elites might be far more damaging.
Here a parallel can be drawn to George H.W. Bush, who was introduced to the GOP’s “New Right” base in 1980 as the moderate, Gerald Ford-ish establishment Republican running against Reagan. Thus, the New Right, which essentially took control of the GOP for good with Reagan’s ’80 triumph, never really trusted Bush. Eight years of loyal service as Reagan’s V.P. was enough to win Bush the right’s benefit of the doubt in 1988, but when he “caved” as president — as he did on the S&L bailout, the 1990 tax hike, and a host of other issues — it merely brought back to the surface all of the right’s old attitudes toward him. So when the triumph of the Gulf War faded in 1991, there was room for Pat Buchanan to run to Bush’s right in the 1992 primaries. Buchanan didn’t win any states, but he did secure enough support — especially in New Hampshire — to severely embarrass the president. Obama’s history with liberals, though, is much different from Bush’s history with conservatives.
This isn’t to say that it’s impossible for Obama to lose the Democratic base; it’s just that there’s a lot more goodwill toward him among that base — and a lot more willingness to rationalize his “betrayals” as sensible pragmatism in the face of the other party’s obstructionism — than most people recognize.
At his press conference Tuesday, Obama noted that many of the “purist” liberals now blasting his tax cut deal also savaged his final healthcare compromise earlier this year, which wiped out the public option. It’s an apt comparison. And it’s worth remembering that the cries of betrayal back then did nothing to lessen rank-and-file’s assessment of Obama’s job performance — probably because the main thing they saw was that Obama, unlike every president before him, had actually gotten healthcare done.
By Steve Kornacki-Salon: Wednesday, Dec 8, 2010
Tax-Cut Deal: If It’s Good for Regular Americans, Isn’t That Good Enough for Now?
“Absolute disaster.” “Legislative blackmail.” “Almost moral corruptness.” We get it. Democrats in Congress really, really don’t like President Obama’s tax deal with the Republicans. But is it truly as apocalyptically bad as all that?
— Oh yeah, the rich. They’re getting a 35 percent inheritance tax and an exemption for individual estates under $5 million (Obama and Democrats say both are too generous), and — the part that makes Democrats question their reason for being — the lower Bush-era rates on income above $250,000.
When Democrats finally brought their tax cut package to the floor a few days ago, the Senate couldn’t overcome a filibuster threat. Time was running out. Obama said his top priority is to make sure 2 million long-term unemployed don’t lose their lifelines and “tens of millions of hardworking Americans are not seeing their paychecks shrink on January 1st just because the folks here in Washington are busy trying to score political points.” The agreement gives Washington time to have the political argument over taxes, he said, without doing harm to individuals or the economy as a whole.
Some liberal interest groups have pounced on Obama and branded the deal a complete sellout. “If Obama’s theory is that Independent voters will flock to presidential weakness, mission accomplished,” wrote Adam Green, head of the Progressive Change Campaign Committee. His evidence: An Associated Press dispatch Monday headlined “Republicans achieve top goal in Obama tax-cut plan.” Republicans “largely dictated the terms” of the compromise though they don’t control the House, Senate or White House, the AP said.
Never mind that Republicans would have preferred a permanent extension of the high-end tax cuts instead of the two years they got. Or that they agreed to extend unemployment benefits for an unprecedented 13 months, a $56-billion expense, and did not secure spending cuts to offset the cost. Their insistence on such an offset — even as they said there was no need to offset the 10-year, $700 billion cost of the high-end tax cuts — has repeatedly held up attempts to extend the benefits, including twice since Nov. 30.
By Tuesday, the AP had its economic team on the case. New headline: “Tax deal should help economy, analysts say.” Bill Scher of the very liberal Campaign for America’s Future implored Democrats to “do the deal. For the Jobless. For the Economy.” The liberal Center for American Progress (CAP) said the plan could save or create 2.2 million jobs. The group’s ThinkProgress blog says Obama’s priorities get far more money in the deal and help 32 times as many people as the GOP’s priorities.
Share This Blog
Unknown Feed- An error has occurred; the feed is probably down. Try again later.
mykeystrokes.com 
You must be logged in to post a comment.