Booman Tribune

$50 Billion Middle Class Tax Hike, 38 Million Refunds Delayed

by clammyc
Sun Dec 2nd, 2007 at 12:24:48 PM EST

We’ve seen the following scenario more than a few times before: a proposed massive tax cut is proposed – focusing mainly on the upper 5% or on corporate interest groups. Many Congressional Democrats (rightfully) protest this, and are painted as ones who want to raise the taxes of “people like you and me”. Ultimately, even though this is highly dishonest, at best, some sort of massive tax cut is passed – mainly benefiting those who I mentioned above – with no way to pay for the cuts.

Now picture this scenario, because the outcome is baffling in it’s backward nature, yet at the same time completely expected. A massive tax hike is set to take place on tens of millions of families , including many who only work and own a home, and even a good number of families that earn under $100,000. Democrats in Congress are pushing to get a bill that takes care of this, and as promised last year, don’t want to add another $50 billion to the deficit so they want to offset this cut with other increases on a select group of very high earners who are already getting an unfair tax advantage elsewhere.

Republicans don’t want to pay for this tax cut to the middle class, even though they are “in favor of it” and therefore either want to add another $50 billion to the deficit or give these millions of families a tax hike, while preserving the unfair tax cuts to their favored constituents. Democrats are being blamed for not getting something done quicker, and as a result, even if something is passed, 38 million people will now have delays in getting their refund early next year.

Of course, I am talking about the AMT (Alternative Minimum Tax) bills that are kicking around Congress now. And while I don’t really want to talk tax, I want to talk about the framing here in terms of what should be said and how this should be discussed – because this should be an absolute slam dunk winner of an issue for Democrats, yet they are going to be painted into a corner if they don’t get out in front of this.

Right now, the republicans, and Mister Bush are playing chicken with the Democrats on this, all while holding hostage the $50 billion in additional taxes that the middle class will have to pay. By doing so (in addition to being a total dickish move), they are at the same time continuing to be completely fiscally irresponsible and also show their contempt for the plight of the middle class.

It is really that simple. Because of their delays and threats of filibuster of anything that is remotely fair or responsible, we have stories like this (from the AP link above):

Silena Davis had counted on an early tax refund to pay for getting her teeth fixed. Now, because Congress has dawdled all year on a tax bill, she and millions of other early filers could have to wait extra weeks for refunds that last year averaged $2,291.

The Internal Revenue Service is looking hard at delaying the start of its filing season, set to kick off on Jan. 14, if Congress fails to pass legislation in the next two weeks. At issue is how to handle what could be a dramatic increase in the number of people facing a higher alternative minimum tax.

If there is a delay and it extends into mid-February, it would slow nearly 38 million refunds worth a total of about $87 billion, the IRS Oversight Board predicts.

"It would definitely make a big difference with me," said Davis, a George Washington University Law School administrator. "I'm going to have to get a crown and it's going to be really expensive."

For those who don’t know or think about how bad this will be if nothing is passed, the Joint Committee on Taxation released a report (JCS-38-07) that has nearly 14% of all households being hit this year, with that number increasing over the next couple of years. Approximately half of all families with income between $75,000 - $100,000 will be hit this year alone. So we are talking some pretty big numbers.

Republicans want to cut spending to pay for this, if they even want to pay for it at all. Yet, nobody has come up with a proposal that even has basics in terms of paying for this. So, the lip service aside, republicans are perfectly content with causing 38 million refunds to be delayed and increasing taxes on those who can afford it least by $50 billion. This is obviously a killer of an issue both politically and in reality.

Yet, instead of using the majority that he has or doing any sort of public awareness of the fact that republicans are doing this, Senator Reid is working to add another $50 billion to the deficit while promising to extend other tax cuts with appropriate spending cuts elsewhere. And the party line is that something has to and will get done but at this point it looks like Bushie tax cuts will be extended as well, with cuts to programs that republicans will be amenable to (read: stuff that impacts We the People).

Either way, millions of people are going to be screwed, and a golden opportunity to lay this at the feet of those who are responsible for this debacle (and at the same time irresponsible with the country’s money) is getting missed. As a result, the “Democrats don’t care about the deficit either” meme will be easier to use against them.

The fact that republicans aren’t getting slaughtered for this predicament is simply amazing. The fact that tens of millions of people are about to get royally screwed because of this game of chicken, especially at a time when holiday bills will come due and the housing market is crashing is reprehensible.



Display:
by clammyc (clam227atyahoo) on Sun Dec 2nd, 2007 at 12:25:42 PM EST
Clammy, who does the AMT actually apply to?  Is it a certain income level, does filing status or the number of dependents you have affect whether it hits you, or what?  I've been wondering this for a while, but never see anything that clearly lays out just who is in for an ugly surprise if this isn't fixed.  

"Little people are very stuff-intensive."
by CabinGirl on Sun Dec 2nd, 2007 at 02:06:13 PM EST
[ Parent ]
basically it is a different way of calculating your tax, and whichever one is higher is the one you use.

There is an exclusion of around $60,000 (which will drop to $40,000 or so this year if nothing is done) where there is no tax.  Then there is around 26% on the next $50,000 or so and then 28% on the rest.  

The income used is your regular income, but you add back any state and local taxes, property taxes, mortgage interest paid, etc. so that people that work and own a home get hit when this wasn't supposed to really hit any wage earners....

So, all of the people that are at least in that $20,000 range of the potential drop are vulnerable, or if you bought a home, had a child or a few other things.

My Three Cents - 50% more opinion for free

by clammyc (clam227atyahoo) on Sun Dec 2nd, 2007 at 09:13:34 PM EST
[ Parent ]
So, if I understand this correctly, people who may not have been hit with this last year are at risk for owing taxes of 26% on the 20,000 ($5,200) that will no longer be excluded if nothing is done before the end of the year?  And there's the potential that it will also push part of their income into the 28% bracket?

"Little people are very stuff-intensive."
by CabinGirl on Sun Dec 2nd, 2007 at 09:29:03 PM EST
[ Parent ]
something like that, although as with all tax stuff, it is a bit more complex and confusing than that.....

My Three Cents - 50% more opinion for free
by clammyc (clam227atyahoo) on Mon Dec 3rd, 2007 at 01:39:02 PM EST
[ Parent ]
Am I mistaken, but wasn't it Bill Clinton who lost the Congress in 1994 because he raised taxes on the wealthy? Kansasans typically vote against their own best interests, isn't that the axiom? So what makes anyone believe that a Democratic Congress standing behind a Democratic president after 2008 is going to go against the grain and rescue the middle class. We are not even talking about the poor any more.

But there is no middle class; it is all about the rich and famous, and of course, the credit card path to wealth. Goddamned tax and spend liberals! They won't be in for long.

by shergald on Sun Dec 2nd, 2007 at 01:50:09 PM EST
I'm sorry but to me Reid is part of the problem, i.e. representing corporations and the super elites instead of the American people, national interest.

This one is incredible for there is so much bi-partisan support to change the AMT so I see it easily passing, except for the other corrupt corporate representatives.

A little awareness and getting on the talk shows would do it.  

Either he is corrupt as hell, which I suspect because while people are forgetting fast that the comprehensive immigration bill was written by corporate lobbyists, the US Chamber of Commerce, had massive guest worker Visas in it and the AFL-CIO opposed it...they tried to push that through anyway.

So, now we get another scenario that isn't representing what the American people want in any way.

Either that or he is incompetent, but I think more he's representing huge money interests frankly.

NoSlaves.com blog | The Economic Populist

by Robert Oak (roak <symbol> noslaves period com) on Sun Dec 2nd, 2007 at 09:19:35 PM EST


Display:
Go to: [ Booman Tribune Homepage : Top of page : Top of comments ]
Menu
Login
. Make a new account
. Reset password





Find textbooks at Alibris!

NOTE: Overstock bests Amazon's prices and is "blue."

THE BOOKS WITH "BUZZ":
______________

Senator Edward M. Kennedy tells his extraordinary personal story:

True Compass: A Memoir
by Edward M. Kennedy.

Read Barack Obama's vision for America:

The Audacity of Hope: Thoughts on Reclaiming the American Dream
by Barack Obama

Boran2 and maryb2004 recommend:

The Big Over Easy: A Nursery Crime
by Jasper Fforde

Must-have information for all presidents-and citizens-of the twenty-first century?

Physics for Future Presidents: The Science behind the Headlines
Richard A. Muller

rae recommends:

Dark Ages America: The Final Phase of Empire
by Morris Berman.

On BooMan’s shelf:

Team of Rivals: The Political Genius of Abraham Lincoln
by Doris Kearns Goodwin

This looks interesting:

Adventure Divas
by Holly Morris

Here’s a good one from
Elizabeth Gilbert:

Eat Pray Love
by Elizabeth Gilbert

"Crash" * Best Motion Picture, Academy Awards * Only $11.79 at Overstock * 2006 SAG Winner, Best Ensemble

Check out
Powell's new section:
NEW FAVORITES

Selected new arrivals at 30% off

Recommended by Indianadem and ejmw:
The Conscience of a Liberal
by Paul Wellstone

From northcountry’s bookshelf:

The New Golden Age:
The Coming Revolution Against
Political Corruption and Economic Chaos
by Ravi Batra

A novel about contractors in Iraq from the woman that runs The Spy That Billed Me:

Outsourced: A Novel
from RJ Hillhouse.


Great Deals
----- * ^ * -----

Find mystery novels by Nancy Pickard ("Kansas")



Challenging Empire: How People, Governments, and the UN Defy US Power by Phyllis Bennis (interviewed on DN!)


Featured by Keith Olbermann, New (Powell's Sale): Rogue State: A Guide to the World's Only Superpower by William Blum (whose other books merit serious consideration)


"Explosive" State of War: The Secret History of the CIA and the Bush Administration
by James Risen


The book the CIA doesn't want you to read: Jawbreaker: The Attack on Bin Laden and Al Qaeda: A Personal Account by the CIA's Key Field Commander
Larry Johnson's review


BT's all-time best seller:

PERMACULTURE:
A Designers' Manual

$79.95 * Sale: $59.95


Unequal Sisters: A Multicultural Reader in U.S. Women's History (Third Edition)


The Undercover Economist: Exposing Why the Rich Are Rich, the Poor Are Poor And Why You Can Never Buy a Decent Used Car!


The Worst Hard Time: The Untold Story of Those Who Survived the Great American Dust Bowl
by Timothy Egan


Green Press Initiative
----- * ^ * -----


Journalistas: 100 Years of the Best Writing and Reporting by Women Journalists by Eleanor Mills * NYT review


Bury Me Standing: the Gypsies & Their Journey


1491: New Revelations of the Americas before Columbus



Brokeback Mountain
by Annie Proulx
----- * ^ * -----
Check out Powell's
"At The Movies"


Imperial Ambitions: Conversations on the Post-9/11 World by Noam Chomsky (Power & Terror: Post 9-11 Talks)


The Price of Privilege:

How Parental Pressure and
Material Advantage Are Creating a Generation of
Disconnected and Unhappy Kids

by Madeline Levine


Save 35-70% on
name brand clothing,
footwear, and outdoor gear
at SierraTradingPost.com

:





We listened to PEN American Center's "State of Emergency" and found 1940s books by Curzio Malaparte only at Alibris. (Selection (MP3) excerpted from "The Skin.")

Alibris - Books You Thought You'd Never Find
Banned Books * Are you a fan of Film Noir, Art House, Documentaries or Hong Kong Action? * Searching for a long-lost children's book or a first printing of Miles Davis' Kind of Blue on vinyl? Find it at Alibris!

:
:
www.Patagonia.com


Listed on BlogShares

© 2009 Booman Tribune