Tag: Bush tax increase

Mitt Romney had a Good Idea

Mitt Romney had a Good Idea

Posted on by Jack

In defending his tax plan which many analysts thought impossible Mitt Romney did come up with 2 good ideas, one of which may be a partial solution to the fiscal cliff we are facing.

President Obama is pretty insistent on raising the tax rates on households making over a quarter million dollars per year. Republicans are insistent that this rate won’t be raised. This standoff is over the temporary Bush tax cuts which should have expired but were temporarily extended 2 years ago and are now set to expire again at the end of this year.

The Democratic view is that these tax cuts should be kept in place for those households making over a quarter million dollars per year and allowed to expire for those earning more. The Republican view is that the tax cuts should be extended for everyone, regardless of income. Let us just call this the tax rate standoff.

Certainly there are many other tax issues – the estate tax, payroll taxes, dividend taxes, capital gains taxes, carried interest to name a few – but I think Mitt Romney may have suggested the solution to the tax rate standoff.

So here is Mitt’s good idea :

And so, in terms of bringing down deductions, one way of doing that would be say everybody gets — I’ll pick a number — $25,000 of deductions and credits, and you can decide which ones to use. Your home mortgage interest deduction, charity, child tax credit, and so forth, you can use those as part of filling that bucket, if you will, of deductions.

So if rates are kept the same on everyone (as the Republicans want), Congress can still limit deductions to a number which will not adversely effect those households making less than a quarter million dollars per year but would still raise taxes on those households making over a quarter million dollars per year (as the Democrats want).

Of course, it won’t be a sharp divide at a quarter million dollars per year but it meets the spirit of what both sides want to do. I’m not sure if the number picked is the right one and if there should be additional rules but this caps could be the start of a discussion.

implications of tax compromise to delay Bush tax hike

implications of tax compromise to delay Bush tax hike

Posted on by Jack

There is a very interesting exchange of views about the implications of the tax compromise to delay the Bush tax hike or extend the Bush tax cuts, depending on your point of view.

The HealthBeatBlog hosts a nice discussion of the implications of this tax compromise for Medicare, Social Security and Health Care Reform. The link is to Part 1. So more is coming and probably soon.

Bush tax hike delayed

Bush tax hike delayed

Posted on by Jack

The delayed Bush tax hike (aka the Bush tax cuts) has been delayed by a compromise. I call them the delayed Bush tax hike because President George W. Bush gave us a temporary tax cut which would have expired this year giving us a tax hike. This was discussed in this blog a few days back as the Bush tax increase.

There have been numerous new articles and endless commentary on this on this so I won’t add much more for now, just point to 2 of the more interesting comments I have seen.

MAD from Forbes

Obama: President; McConnell: Sucker

Bush tax increase

Bush tax increase

Posted on by Jack

Seems to me if George W. Bush could not find a way to make his tax cuts permanent, we cannot blame the present administration or Congress for not finding a way to extend these cuts during a recession. Should any increase now be called the Bush tax increase? Or perhaps the George W. Bush delayed tax increases.

It also bothers me that the Republican minority is holding up extending these tax cuts for the vast majority of citizens. If the majority in Congress cannot find a reasonable compromise with this very stubborn minority, I would have no problem with letting the entire tax cut expire on schedule. I think that would be bad for the economy and bad for the American people but preferable to allowing a minority to dictate policy and increasing the deficit to give a larger tax break to the richest Americans.

As I understand it if the tax break is limited to the first $250,000 of income, everyone still gets a tax break. It is just that the person who makes a million a year gets the same tax break as someone making a quarter of that.

Can’t Congress reach a reasonable compromise? – higher income cut-off, estate exemptions, temporary extensions, etc. I think the uncertainties about future income and estate taxes are more causing problems than any compromise I can imagine.