President to Sign Tax Package

Fiscal Cliff Avoided...Permanent Tax Changes...Very Few Cuts in Spending

It appears President Obama will sign legislation which will avoid the "fiscal cliff"....until approximately some time in March when the federal government is expected to run out of money...AGAIN.

Assuming the President signs the legislation, here are the highlights:


There will be PERMANENT CHANGES.


Tax rates will be unchanged for individuals earning up to $400,000 and for families earning above $450,000. As a result, the Bush tax cuts will remain in force for all earners below these limits.


Capital Gains and dividends will be PERMANENTLY  set at 20% for those above the new income benchmarks, but will remain at 15% for all others.


Estate taxation will be set at 40% for those above the new income limits with a $5 million exemption, and will be indexed for inflation; those below the income threshold will remain at the Bush level. 


The expansion of tax breaks for low-income Americans; namely the Earned Income Tax Credit, the Child Tax Credit, and the American Opportunity Tax credit will be extended for 5 years.


The Alternative Minimum Tax will be permanently patched to avoid raising taxes on the "middle class."


Two limits on tax exemptions and deductions for "higher income" individuals will be reimposed:  the Personal Exemption Phase Out will be set at $250,000, and the Itemized Deduction limitation kicks in at $300,000.


Some other noteworthy items in the bill:


The pay freeze on members of Congress (originally lifted by the President), will be reimposed.


Scheduled cuts to doctors under Medicare would be avoided for one year.


Now the other side of the package:


Federal unemployment insurance will be extended for another year benefiting those unemployed for longer than 26 weeks.


The payroll tax holiday is OVER. The payroll tax will jump from 4.2% to 6.2%.


The debt-ceiling was not addressed in any way.

Who else made out pretty well in this deal?


http://www.nakedcapitalism.com/2013/01/eight-corporate-subsidies-in-the-fiscal-cliff-bill-from-goldman-sachs-to-disney-to-nascar.html


So there you have it; this is the end result of THREE YEARS of fighting, and the worst part...


The United States hits the debt ceiling TODAY...


..because some time in March, the Treasury Secretary has to make decisions about which U.S. bills will be paid, and which won't.

A sad commentary about the future of our economic well-being and the lifestyle all Americans face today, as well as, in the future.


Dick Arendt