Will taxes go up Jan 1, 2013?

[Marginal Economist]

With the fiscal cliff looming, what do you expect to happen on Jan 1st?

 

I expect to see the return of the full payroll tax, so that is a 2% increase for the everyone (1st $110K). I expect to see that happen no matter who is elected.

 

I just completed my benefit election for 2013 and decided to choose a cheaper health care plan. If I had stayed with my HMO, I would have spent another $120 month. The high deductible PPO paired with an HSA should hopefully keep my costs the same, unless someone in my family has a moderate or above incident.

 

What other increases or decreases do you see on the horizon?

[cal50]

Watch the state of California.

If the federal taxes increase and Cali passes their massive tax state tax increase it will be one expensive place to live or do business.

They can always move to France and feel right at home.

 

Regardless of how anyone feels about presidential candidates the existing congress has an approval rating lower than whale shit.

They all need to go.

[RangerM]

What other increases or decreases do you see on the horizon?

Speaking as a small businessperson who works as a consultant for large companies, I foresee industry consolidating more operations into fewer, larger facilities. This is because as the cost of doing business rises, the costs are more easily borne by larger operations with fewer employees.

 

For instance, there are approximately 110 cement kilns in the United States. Several are older, less efficient units. They are able to stay in business because they are either remote (offsetting the costs of shipping) or they specialize in products that are uniquely qualified due to their chemical properties. However, under newly promulgated EPA regulation, fewer than half are compliant, and those that aren't, are unlikely to bear the costs of upgrades necessary to stay in business. The newer, larger kilns are more likely to be retrofitted, but unlikely to ever be expanded (production-wise). Whatever capacity shortfalls occur within the U.S. will likely be compensated for by importation.

 

My best guess (based on observation and feedback from my clients) is this will also occur in other industry. Increases in the cost of doing business (whatever the reason) will stifle employment growth.

 

Not saying small businesses (the ones that are largely exempted from many of the new regulations) will necessarily suffer, but the midsize businesses probably will.

[grbeck]

Not saying small businesses (the ones that are largely exempted from many of the new regulations) will necessarily suffer, but the midsize businesses probably will.

 

It will encourage small businesses to do whatever is necessary to avoid falling under the new regulations. If the cut-off point is 50 employees, for example, then companies will work to keep their employee count below that number.

 

At any rate, the Bush tax cuts and the Obama tax cut are scheduled to expire soon. Even the Republicans have said that they will let the second expire. So taxes will increase.

[FiredMotorCompany]

No one is forced to operate a business.

 

What is Big "0" going to do if businesses close their own doors? Layoff their employees?

 

Massive layoffs. No more tax income. No employee health benefits. More people dropping off the unemployment rolls.

More food stamps. More plywood storefronts. Fewer taxpayers. More tax subsidized "Disability". Collapsing economy.

 

So, what will Big "0" do?

 

Raise taxes? Borrow more money? Destroy more industries?

 

Or mandate companies shall not close.......

[grbeck]

No one is forced to operate a business.

 

What is Big "0" going to do if businesses close their own doors? Layoff their employees?

 

Massive layoffs. No more tax income. No employee health benefits. More people dropping off the unemployment rolls.

More food stamps. More plywood storefronts. Fewer taxpayers. More tax subsidized "Disability". Collapsing economy.

 

So, what will Big "0" do?

 

Raise taxes? Borrow more money? Destroy more industries?

 

Or mandate companies shall not close.......

 

The challenge won't be because businesses close their doors. The most likely scenario is that they will do whatever is possible to avoid increasing costs, or subject themselves to various regulations that are aimed at "big" businesses. Which means that they will avoid hiring new people whenever possible, and not replace employees who leave or retire.

Edited November 7, 2012 by grbeck

[theoldwizard]

Will taxes go up on Jan 1, 2013 ? YES !

 

The real issue is will the new Congress leave them at that level r will they do something about it.

[sprinter]

No one is forced to operate a business.

 

What is Big "0" going to do if businesses close their own doors? Layoff their employees?

 

Massive layoffs. No more tax income. No employee health benefits. More people dropping off the unemployment rolls.

More food stamps. More plywood storefronts. Fewer taxpayers. More tax subsidized "Disability". Collapsing economy.

 

So, what will Big "0" do?

 

Raise taxes? Borrow more money? Destroy more industries?

 

Or mandate companies shall not close.......

 

 

Since he is a Marxist, the government will continue taking over these bankrupt businesses

http://www.morningstartv.com/oak-initiative/marxism-america

[sprinter]

Will taxes go up on Jan 1, 2013 ? YES !

 

The real issue is will the new Congress leave them at that level r will they do something about it.

 

Watch out for Obamacare. My wife and I will see a tax increase of over $4600 next year according to this chart. You can thank the Unions for backing this crap.

http://blog.heritage.org/2012/06/29/obamacare-raises-taxes-on-3-million-middle-class-americans/

[sprinter]

Al Gore will become a multi-billionaire

 

http://www.washingtonpost.com/business/obama-may-levy-carbon-tax-to-cut-us-deficit-hsbc-says/2012/11/07/28fbe4c4-28f8-11e2-aaa5-ac786110c486_story.html

[Langston Hughes]

Since he is a Marxist, the government will continue taking over these bankrupt businesses

http://www.morningst...marxism-america

 

He's not a marxist! Your just never going to grow up are you?

[Bored of Pisteon]

He's not a marxist! Your just never going to grow up are you?

 

It's spelled YOU'RE not "YOUR".

 

That's 2 spelling errors ( 1 from this thread and 1 from another in such a short period of time.)

 

You must be really losing it.

Edited November 7, 2012 by Bored of Pisteon

[Cocheese]

The challenge won't be because businesses close their doors. The most likely scenario is that they will do whatever is possible to avoid increasing costs, or subject themselves to various regulations that are aimed at "big" businesses. Which means that they will avoid hiring new people whenever possible, and not replace employees who leave or retire.

 

This has been happening in the Province of Quebec for some time with their language laws. I don't know the exact details, but once a company reaches 50 employees, the law kicks in. Companies just stop growing once they hit 49

[Langston Hughes]

It's spelled YOU'RE not "YOUR".

 

That's 2 spelling errors ( 1 from this thread and 1 from another in such a short period of time.)

 

You must be really losing it.

 

Spelling errors mean I'm losing it? That's a bit of a stretch isn't it? I'm not exactly known for my love of the queens english on here am I?

[Trimdingman]

Spelling errors mean I'm losing it? That's a bit of a stretch isn't it? I'm not exactly known for my love of the queens english on here am I?

 

Still; Obama is a Marxist. Look it up.

 

 

 

Raising taxes does not take much thought. Any idiot can raise taxes. When Obama says he will raise taxes on the rich, to whom is he speaking? He is speaking to idiots who make up the majority of his base. They are too stupid to succeed, so those who do succeed should pay. That is revenge on God for making them stupid. The problem is, as thinking people know, that there is a point at which higher taxes results in reduced revenue. Higher taxes to the rich gives them incentive to reduce costs. This means lower wages, fewer employees, moving manufacturing to tax havens, etc. Each of these things, which have been going on for some time, by the way, reduces revenue to the government. Zero tax = zero revenue. 100% tax = zero revenue (as nobody will willingly work) Somewhere in between is the point of maximum revenue. The way to prosperity is not what government wants to hear. It is to reduce government. Keep taxes and government programs and regulations to a bare minimum, and let market forces work their magic. How would you like it if you put out a resume, and companies were out-bidding each other for your services, instead of playing you against each other to force you into servitude? Where are we now? Which way are we headed? One is free market capitalism. The other is Marxism.

Edited November 12, 2012 by Trimdingman

[Marginal Economist]

Zero tax = zero revenue. 100% tax = zero revenue (as nobody will willingly work) Somewhere in between is the point of maximum revenue.

 

Where do you think that point is? Most would say it is significantly above our current tax rates. Without pulling studies on Laffler, I think the number I recall was around 70%.

Edited November 12, 2012 by Marginal Economist

[FiredMotorCompany]

If they were taxing at 100%, government would STILL borrow money and spend beyond revenues in perpetuity. Because handing out money is their ticket to re-election. Not cutting funding to constituents. And every session looks for new ways to spend more. Repeat.

Edited November 14, 2012 by FiredMotorCompany

[grbeck]

Here's an interesting article on those supposedly "rich" people making $250,000 a year or more, who deserve to be soaked, I mean, taxed more heavily, by the federal government.

 

Be warned - it uses facts and real-world figures, and factors in the cost-of-living for various places, which will show that those awful rich really aren't so...rich:

 

http://www.thefiscal...lass.aspx#page3

 

Of course, I'm all for some tax increases, such as those on Hollywood and its products: http://washingtonexa...64#.UJ1Ppoc0WSq

 

Even if the tax hikes aren't passed, watching and listening to this would be priceless:

 

As Reynolds noted, one side effect of such proposals is that it causes far-Left Hollywood types to suddenly begin babbling about the depressing effects of high tax rates upon economic growth, as though they had been suddenly possessed by the ghost of Milton Friedman. That’s fun even if the tax proposals end up getting defeated. Especially now that we have YouTube to disseminate and immortalize their panicked bursts of “trickle-down economic” wisdom.

 

That would be more entertaining than anything on television or the big screen.

 

But there's more!

 

Reynolds had other suggestions for revenue proposals – many of them involving the elimination of deductions, which seems to be the spirit in Washington at the moment – that would hurt blue state political machines and liberal institutions the most. Capping the mortgage interest deduction at $250,000, for example, would hurt those rich blue enclaves with high property values – 8 of the 10 richest counties in America voted for Barack Obama in 2012. Taxing trust funds and hoards of foundation money would hurt the Left, as outside of Hollywood, rich liberals are more likely to be sitting on piles of inherited assets, while conservative millionaires tend to be actively generating and re-investing income. Ending the federal tax deductions for state and local taxes – an idea prominently advocated by Newt Gingrich during the Republican primary – would end the practice of federal taxpayers subsidizing the government greed of those big-spending blue states. It’s actually a form of inter-state redistribution as it stands, so let’s do away with it.

 

Let's get on with it and watch whether people are willing to put their money where their mouth is (or their vote is)!

 

Or are there still people who actually believe that:

 

a. only Republicans are rich;

b. we can somehow draft a federal tax that will only target Republicans and still raise sufficient revenue to seriously reduce the deficit;

c. rich liberals will pay these higher taxes without a peep;

d. all of the above.

Edited November 13, 2012 by grbeck

[cal50]

Liberalism is great....when others are picking up the tab.

[Mark B. Morrow]

Here's an interesting article on those supposedly "rich" people making $250,000 a year or more, who deserve to be soaked, I mean, taxed more heavily, by the federal government.

 

Be warned - it uses facts and real-world figures, and factors in the cost-of-living for various places, which will show that those awful rich really aren't so...rich:

 

http://www.thefiscal...lass.aspx#page3

 

Of course, I'm all for some tax increases, such as those on Hollywood and its products: http://washingtonexa...64#.UJ1Ppoc0WSq

 

Even if the tax hikes aren't passed, watching and listening to this would be priceless:

 

As Reynolds noted, one side effect of such proposals is that it causes far-Left Hollywood types to suddenly begin babbling about the depressing effects of high tax rates upon economic growth, as though they had been suddenly possessed by the ghost of Milton Friedman. That’s fun even if the tax proposals end up getting defeated. Especially now that we have YouTube to disseminate and immortalize their panicked bursts of “trickle-down economic” wisdom.

 

That would be more entertaining than anything on television or the big screen.

 

But there's more!

 

Reynolds had other suggestions for revenue proposals – many of them involving the elimination of deductions, which seems to be the spirit in Washington at the moment – that would hurt blue state political machines and liberal institutions the most. Capping the mortgage interest deduction at $250,000, for example, would hurt those rich blue enclaves with high property values – 8 of the 10 richest counties in America voted for Barack Obama in 2012. Taxing trust funds and hoards of foundation money would hurt the Left, as outside of Hollywood, rich liberals are more likely to be sitting on piles of inherited assets, while conservative millionaires tend to be actively generating and re-investing income. Ending the federal tax deductions for state and local taxes – an idea prominently advocated by Newt Gingrich during the Republican primary – would end the practice of federal taxpayers subsidizing the government greed of those big-spending blue states. It’s actually a form of inter-state redistribution as it stands, so let’s do away with it.

 

Let's get on with it and watch whether people are willing to put their money where their mouth is (or their vote is)!

 

Or are there still people who actually believe that:

 

a. only Republicans are rich;

b. we can somehow draft a federal tax that will only target Republicans and still raise sufficient revenue to seriously reduce the deficit;

c. rich liberals will pay these higher taxes without a peep;

d. all of the above.

 

The problem with your cited chart is that the tax isn't levied on earned income, it is on Adjusted Gross Income which takes into account the stratified rate calculations and all manner of deductions and exemptions. Going back to the Clinton era top rate of 39.4% while keeping the other rates at the present levels would still mean that the top rate payers would be paying less than they did under Clinton since the dollars at the lower marginal rates would be taxed at a lower rate.

 

Phasing out capital gains treatment at a certain capped level, (say $1 million per year, excluding long term investments in a residence, farm or business property) would make for a fairer tax. Why should stock speculators and hedge fund managers pay 15% while wage earners pay more? Tax the dollars over the cap at the regular marginal rate. Mitt Romney's lifestyle would not change a bit if his income was taxed at the 39.4% rate and he wouldn't quit making money. Legitimate losses would still be available as deductions. as they were before.

[grbeck]

The problem with your cited chart is that the tax isn't levied on earned income, it is on Adjusted Gross Income which takes into account the stratified rate calculations and all manner of deductions and exemptions.

 

There is more to the article than the chart.

 

The copy of the article takes a detailed look at a hypothetical couple's income, and takes into account all of the available deductions and exemptions available under the federal Tax Code:

 

Two years ago, The Fiscal Times asked BDO USA, a national tax accounting firm, to compute the total state, local and federal tax burden of a hypothetical two-career couple with two kids, earning $250,000. To factor in varying state and local taxes, as well as drastically different costs of living, BDO placed the couple in seven different locales around the country with top-notch public school districts, using national government data on spending. The text below was written by Karen Hube, a Fiscal Times contributor.

 

The analysis assumes that this hypothetical couple – let’s call them Mr. and Mrs. Jones – are each on the payroll of companies, with professional positions. They take advantage of all tax benefits available to them, such as pretax contributions to 401(k) plans and medical, childcare and transportation flexible spending accounts. (emphasis added)They have no credit card debt, but Mr. Jones racked up $40,208 in student loan debt in undergraduate and graduate school, and Mrs. Jones borrowed $22,650 to get her undergraduate degree (both amounts are equal to the national averages for their levels of education). They also have a car loan on one of two cars, and a mortgage for 80 percent of the value of a typical home in their communities for a family of four, which includes one toddler and one school-age child.

 

The bottom line: It’s not exactly easy street for our $250,000-a-year family, especially when they live in high-tax areas on either coast. Even with an additional $3,000 in investment income, they end up in the red – after taxes, saving for retirement and their children’s education, and a middle-of-the-road cost of living – in seven out of the eight communities in the analysis. The worst: Huntington, N.Y., and Glendale, Calif., followed by Washington, D.C., Bethesda, Md., Alexandria, Va., Naperville, Ill. and Pinecrest, Fla. In Plano, Texas, the couple’s balance sheet would end up positive, but only by $4,963. (emphasis added)

 

The article did take these factors into account, clearly uses Adjusted Gross Income, and clearly shows that these tax increases will hurt plenty of two-income families.

 

name='Mark B. Morrow' timestamp='1352852716' post='811592'][/b]

Going back to the Clinton era top rate of 39.4% while keeping the other rates at the present levels would still mean that the top rate payers would be paying less than they did under Clinton since the dollars at the lower marginal rates would be taxed at a lower rate.

 

If that's the case, then why did New York Senator Charles Schumer propose raising the threshold to at which the tax hikes kick in to $1 million in annual income? Could it because he realizes that the article is accurate, and this tax hikes would throw the household budgets of many of his constituents into the red?

 

Of course, it's not as though that $250,000 annual income threshold came about as the result of painstaking research. It started with an off-the-cuff remark from then-candidate Obama:

 

The $250,000 threshold was first mentioned in a campaign speech by President Obama in 2008. “It’s an historical accident,” Williams says. “I don’t think there was any thought given to why $250,000 – it became a mantra.” Whether or not $250,000 represents affluence “depends a great deal upon where you live,” he says.

 

Oops!

 

And those Clinton-era rates and income levels would only be relevant if we were paying Clinton-era prices for various goods and services. Perhaps it's different in Pittsburgh, but I'm not paying the same amount of money for gas, food and clothing that I was in 1995, and neither are any of my friends and relatives. Note that the cost-of-living also varies between regions, too:

 

Consider, for example, the tab for the same assortment of ground beef, tuna, milk, eggs, margarine, potatoes, bananas, bread, orange juice, coffee, sugar and cereal: In Twin Falls, Idaho, $23.41. In New York City in December of 2010, you would have to shell out 72 percent more, $40.29, according to The Council for Community and Economic Research. That higher percentage carries across all expenditures, from child care costs to haircuts.

 

Of course, housing costs are one of the biggest variables. In Glendale, the Joneses can live reasonably well – but not extravagantly – in a three- or four-bedroom home valued around $750,000. In Twin Falls, you would need to spend about half as much on an equivalent home.

 

After covering taxes and only essential expenses for housing, groceries, child care, clothing, transportation – and their dog, the Joneses would still be in the red by $1,787 in Huntington. In Plano, Texas, they would have $27,556 to spare. Factor in common additional expenses for a working couple with two children – music lessons, day camp costs, and after school sports, entertainment, cleaning services, gifts, and a annual week-long vacation – the Joneses get deep in the red in Huntington to the tune of $23,178. In Plano, the best case scenario, they would still have money to spare, but just $4963.

 

Phasing out capital gains treatment at a certain capped level, (say $1 million per year, excluding long term investments in a residence, farm or business property) would make for a fairer tax. Why should stock speculators and hedge fund managers pay 15% while wage earners pay more? Tax the dollars over the cap at the regular marginal rate. Mitt Romney's lifestyle would not change a bit if his income was taxed at the 39.4% rate and he wouldn't quit making money. Legitimate losses would still be available as deductions. as they were before.

 

You aren't going to close the deficit by taxing those things, given that the figures I've cited have pretty much made the tax increases for all families earning over $250,000 annually DOA for anyone who actually sits down and does the calculations. I'm not supporting tax increases on some nebulous concept of "fairness," and without a solid plan to reduce the deficit, which will require reductions in spending.

 

Why should stock speculators and hedge fund managers pay 15% while wage earners pay more? .

 

And why should over 40 percent pay nothing in federal income taxes?

Edited November 14, 2012 by grbeck

[NickF1011]

The worst: Huntington, N.Y., and Glendale, Calif., followed by Washington, D.C., Bethesda, Md., Alexandria, Va., Naperville, Ill. and Pinecrest, Fla. In Plano, Texas, the couple’s balance sheet would end up positive, but only by $4,963.

 

Yes, but people making those incomes choose to live in those expensive areas. There are towns nearby most of those that are much more affordable.

[grbeck]

Yes, but people making those incomes choose to live in those expensive areas. There are towns nearby most of those that are much more affordable.

 

The cost of living varies because lower-cost towns generally have inferior schools, longer commutes, higher crime rates, or all three. It's not as though Community A in Southern California has a high cost of living and offers great schools, plenty of employers within easy driving/walking distance and low crime rates, while Community B has a much lower cost of living and offers all of the same amenities. There are solid reasons that some areas - particularly those in major metropolitan areas - are more expensive to live in than others.

 

You may save money on housing living in Community B, for example, but, if you have children, private school tuition will eat up those savings.

[akirby]

And why should over 40 percent pay nothing in federal income taxes?

 

Because federal taxes are no longer about supporting the federal infrastructure and paying for federal services. It's about redistributing income from those who have more to those who have slightly less and to further environmental and social agendas that would not otherwise be funded from the private sector. It's about making sure that everyone is comfortable whether they work or not and whether they put forth any effort or not.

 

City and county governments operate under strict budgets. They're not allowed to overspend endlessly or they go bankrupt just like any other business. When revenues fall they cut spending and/or raise taxes. Same for state governments. Why should the federal government be any different?

[akirby]

The cost of living varies because lower-cost towns generally have inferior schools, longer commutes, higher crime rates, or all three. It's not as though Community A in Southern California has a high cost of living and offers great schools, plenty of employers within easy driving/walking distance and low crime rates, while Community B has a much lower cost of living and offers all of the same amenities. There are solid reasons that some areas - particularly those in major metropolitan areas - are more expensive to live in than others.

 

You may save money on housing living in Community B, for example, but, if you have children, private school tuition will eat up those savings.

 

Not necessarily true. I live in Forsyth county GA. It's one county away from downtown Atlanta (Fulton county) but is still part of the metro Atlanta area. When we built our house 17 years ago it was the fastest growing county in the nation. My property tax is around 60% of what I would pay in Fulton county which is only 3 miles away. Our schools are FAR better than Fulton county and most other schools in the Atlanta area and the entire state. My house is on a bigger lot yet costs 20% less. We have far less crime than Fulton county and better infrastructure. The tradeoff is more traffic if you have to commute to downtown.

 

There are many reasons why people want to live in a particular area and it doesn't always mean less crime or better schools. It has far more to do with image and access to infrastructure, public transportation, restaurants, night life, events, etc. It also has to do with availability of new building sites.

 

Living in expensive areas is a lifestyle choice, not a requirement to be safe or get a good education.