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Old 01-02-2013, 07:16 AM   #21
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I do think that eventually Medicare and SS will be considerably weakened. If I were in my 60s now I might be strongly tempted to grab the SS cash while it is available.

They are not going to try clawbacks.

Ha
I am not doubtful there is an immediate need to file, as the SS benefit formula will likely not be affected for those that are close to collecting. However, I suspect a change in the COLA will affect everyone under SS and the ER and FRA could get bumped up for those under 55.
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Old 01-02-2013, 07:19 AM   #22
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My first (weekly) paycheck of the new year is $35 less (net). That's the SS deduction going back up which is probably a good thing for the future, but I'm still not thrilled about $140/month lower income. I'll be lucky to get a 2% raise this year from Megacorp to help offset that.
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Old 01-02-2013, 07:20 AM   #23
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So the AMT and estate tax "brackets" will now be indexed for inflation, just like most of the other brackets are now indexed. It's about time. The only big ones left IMHO are the SS earnings brackets ($25k and $32k) which have not changed, and those affect or will affect many of us early retirees. Or will those be part of entitlement reform and/or tax reform?
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Old 01-02-2013, 07:22 AM   #24
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It's our kids who will pay and I'm not happy about that. We should pay our own way - this country is on decline due to our lack of fiscal discipline and I'm not happy about that either.

I was disappointed in the bill since it kicked the can down the road on spending and the problem is spending, not taxes, and I have absolutely no confidence that they will do anything substantive on the spending front. I hope I am wrong.
+1 I suspect the coming battle will be a much harder one, and hopefully we will finally see some tangible spending cuts take place. Keep your tin foil hats or combat helmuts ready.
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Old 01-02-2013, 07:27 AM   #25
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The AMT fix is nice. Glad I didn't sell anything.
The title is no longer true, as last night's bill did provide the 2012 AMT patch, and the IRS won't have to reprogram all their computers and can process 2012 returns right away now. [The IRS had assumed an AMT patch would be passed and programmed their systems accordingly].

But here is a fascinating history of the AMT patch and the legislation that had to be passed every few years, and sometimes every year, to patch it.
2012 Likely to be First Year Without AMT Patch | Tax Foundation

I still can't quite believe the AMT patch was made permanent. I think making it permanent has been strongly resisted because having it on the books created the illusion of lower future deficits even though it ended up being patched again and again. But it got to the point where folks only making $33,750/$45,000 joint would start losing out on deductions/etc., and pay higher marginal rates due to the patch. So it was silly to pretend that these folks would pay the higher taxes in the future.

There are still plenty of us chickens paying higher taxes due to the new higher 2012 AMT exemption at $50,600/$78,750.
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Old 01-02-2013, 07:28 AM   #26
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It's our kids who will pay and I'm not happy about that.
I've been unhappy about that since I was a kid. While the degree of the problem has changed over time, it has been a problem for a very long time.

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We should pay our own way - this country is on decline due to our lack of fiscal discipline and I'm not happy about that either.
To the extent that certain specific aspects of this nation are in decline (which itself is debatable), it would almost surely not be attributable solely due to lack of fiscal discipline. The vast majority of our "problem" can be tracked back to the fact that we've gotten used to exploiting our overwhelming financial and military power to artificially inflate our GDP. This has been going on for almost a century. The free ride is over - and has been over for a while - but we were weaned on a much richer economic environment. We weren't trained to expect and factor into our expectations the fact that other nations would learn to gain economic power from us, and that other nations would learn to resist our economic brow-beating, thereby resetting our source of riches to something closer to the boundaries of our own nation.

Fiscal discipline is part of the remedy, but that's like saying HRIG and HDCV are a cure for encephalitis. That knowledge does no good unless those afflicted come to learn that they're not invulnerable, that they actually do have a problem, that it is within themselves not someone else, that it needs to be treated, that the treatment is worthwhile even though it is going to hurt really bad for a good long while.
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Old 01-02-2013, 08:01 AM   #27
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Thanks for the nice summary link. This was interesting:
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The top tax bracket rises to 39.6%, and applies to income in excess of $400,000 for individuals, and $450,000 for married couples. These thresholds are indexed for inflation*(in a similar manner to all the other tax bracket thresholds). Notably, the $450,000 threshold for married couples is actually a slight form of marriage penalty release, as in the past the top tax bracket threshold was the same for both individuals and married couples. It's also notable that in practice, this change is effectively the same as just allowing the top tax bracket to lapse back to the old rates, as the top tax bracket was already at $388,350 in 2012 (and would have been just shy of $400,000 with the 2013 inflation adjustment). (Note: bear in mind that tax brackets are based upon taxable income*after all deductions, not Adjusted Gross Income.)
I didn't realize that the top tax bracket started at close to $400K anyway. Also didn't realize that those thresholds will be indexed to inflation. I assumed they were going for "bracket creep" again.

Another biggie for FIRE folks - estate tax exemption which was due to reset to $1M for individuals and a 55% top rate was changed to $5.1M per individual (now inflation indexed) and a 40% top rate which was the average of the two competing proposals. It was $5M and 35% in 2012. Again - permanent - no sunsetting.
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Old 01-02-2013, 08:15 AM   #28
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Does anyone know if the 0% capital gains tax rate for those in the 10% tax bracket will remain in effect ?
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Old 01-02-2013, 08:20 AM   #29
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Does anyone know if the 0% capital gains tax rate for those in the 10% tax bracket will remain in effect ?
MichaelB's link indicates that yes, the 0% rate is now permanent. Other things i read indicated it goes to 10%, but those are probably now obsolete.
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Old 01-02-2013, 08:20 AM   #30
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The funny thing is that Grover Norquist supported the deal and viewed it as a tax cut, since it technically took place after Dec. 31.
Just as important was Norquist not threatening anyone who voted against the bill with a primary. He was taken out of play so the Republican House members were finally "free" to vote their consciences, and the resulting non-lopsided split got the bill passed.
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Old 01-02-2013, 08:24 AM   #31
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As usual I am having a devil of a time finding the actual $ impact of the bill. While the bullet point descriptions are nice (and abundant), actual $'s in total are non-existent (that I have found). I assumed that this bill would reduce the deficit vs pre-fiscal cliff revenue/spending.

But on CBS This Morning they reported this bill would increase our deficit by $330 billion .

Found this on Reuter's this morning. "By going over the fiscal cliff, the CBO had previously forecast that the higher taxes and lower spending would slash the fiscal 2013 U.S. budget deficit by more than half, to $641 billion from $1.1 trillion the prior year.

But in its analysis of the Senate-passed plan, the CBO said fiscal 2013 revenues would be $280 billion lower and spending $50 billion higher, resulting in a $330 billion deficit increase, for a total deficit of around $971 billion."

So it appears yesterday's bill reduces our deficit from $1.1T to $971B, or a net reduction of $129B from where we were on 12/31/12. It's going to take a lot more than that, but at least it appears we're heading in the right direction
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Old 01-02-2013, 08:30 AM   #32
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As usual I am having a devil of a time finding the actual $ impact of the bill. While the bullet point descriptions are nice (and abundant), actual $'s in total are non-existent (that I have found). I assumed that this bill would reduce the deficit vs pre-fiscal cliff revenue/spending.

But on CBS This Morning they reported this bill would increase our deficit by $330 billion .

Found this on Reuter's this morning. "By going over the fiscal cliff, the CBO had previously forecast that the higher taxes and lower spending would slash the fiscal 2013 U.S. budget deficit by more than half, to $641 billion from $1.1 trillion the prior year.

But in its analysis of the Senate-passed plan, the CBO said fiscal 2013 revenues would be $280 billion lower and spending $50 billion higher, resulting in a $330 billion deficit increase, for a total deficit of around $971 billion."

So it appears yesterday's bill reduces our deficit from $1.1T to $971B, or a net reduction of $129B from where we were on 12/31/12. It's going to take a lot more than that, but at least it appears we're heading in the right direction
This all depends on what you compare it to. If you compare it to letting the Bush tax cuts expire, which would have brought down the deficit considerably, then there is a big deficit increase. If you compare it to extending where we were last year or some other plans on the table, it will be a deficit reduction. People chose all sorts of points from which to do a comparison so it's almost pointless to listen to all the screaming numbers unless you are willing to drill down through ALL of the assumptions. My brain hurts enough as it is......
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Old 01-02-2013, 08:37 AM   #33
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As usual I am having a devil of a time finding the actual $ impact of the bill. While the bullet point descriptions are nice (and abundant), actual $'s in total are non-existent (that I have found). I assumed that this bill would reduce the deficit vs pre-fiscal cliff revenue/spending.

But on CBS This Morning they reported this bill would increase our deficit by $330 billion .

Found this on Reuter's this morning. "By going over the fiscal cliff, the CBO had previously forecast that the higher taxes and lower spending would slash the fiscal 2013 U.S. budget deficit by more than half, to $641 billion from $1.1 trillion the prior year.

But in its analysis of the Senate-passed plan, the CBO said fiscal 2013 revenues would be $280 billion lower and spending $50 billion higher, resulting in a $330 billion deficit increase, for a total deficit of around $971 billion."

So it appears yesterday's bill reduces our deficit from $1.1T to $971B, or a net reduction of $129B from where we were on 12/31/12. It's going to take a lot more than that, but at least it appears we're heading in the right direction
Heres the CBO scoring http://www.cbo.gov/sites/default/fil...lief%20Act.pdf
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Old 01-02-2013, 08:37 AM   #34
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This all depends on what you compare it to. If you compare it to letting the Bush tax cuts expire, which would have brought down the deficit considerably, then there is a big deficit increase. If you compare it to extending where we were last year or some other plans on the table, it will be a deficit reduction. People chose all sorts of points from which to do a comparison so it's almost pointless to listen to all the screaming numbers unless you are willing to drill down through ALL of the assumptions. My brain hurts enough as it is......
I understand. Unfortunately, CBS didn't give any basis for comparison AND I couldn't understand how raising rates on "the 1%" and letting payroll taxes with no change in spending could increase the deficit. So I had to take a look-see. It would be nice if "news" answered questions, vs generating more for "viewers/readers" to answer for themselves.

I assume it was obvious to everyone who draws breath that anything they did would reduce the deficit less than letting the fiscal cliff provisions take place. After what CBS reported this AM, I'd be willing to bet there will be thousands if not millions this morning who believe the new bill actually increased deficits vs where we were 12/31. All unnecessary water cooler debates, and it wouldn't surprise me if many talking heads get it wrong today as well.

What they did is a step in the right direction IMO and I'm glad they actually finally did something (and some permanent resolutions), but they need to address spending and tax reform (loopholes/deductions) next.
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Old 01-02-2013, 08:47 AM   #35
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I understand. Unfortunately, CBS didn't give any basis for comparison AND I couldn't understand how raising rates on "the 1%" and letting payroll taxes with no change in spending could increase the deficit. So I had to take a look-see. It would be nice if "news" answered questions, vs generating more for "viewers/readers" to answer for themselves.

I assume it was obvious to everyone who draws breath that anything they did would reduce the deficit less than letting the fiscal cliff provisions take place. After what CBS reported this AM, I'd be willing to bet there will be thousands if not millions this morning who believe the new bill actually increased deficits vs where we were 12/31. All unnecessary water cooler debates, and it wouldn't surprise me if many talking heads get it wrong today as well.

What they did is a step in the right direction IMO and I'm glad they actually finally did something (and some permanent resolutions), but they need to address spending and tax reform (loopholes/deductions) next.
Yes, it's really bad. Ultimately it's "spin" and anyone can say anything they darn well please. I have read so many ridiculous assertions on the topic from "news" programs that I gave up long ago. They just pick the most sensational spin and go with that - no qualification, no clarification, no outlining different perspectives. Nothing more to it really - uber superficial coverage. Nonesensical talking heads rule the airways and the sponsors are happy to pay for the ads.
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Old 01-02-2013, 08:51 AM   #36
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The tax discussion is interesting and useful...
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Old 01-02-2013, 08:53 AM   #37
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The tax discussion is interesting and useful...
...but the political comments are arousing the interest of a certain porcine celebrity?
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Old 01-02-2013, 08:55 AM   #38
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...but the political comments are arousing the interest of a certain porcine celebrity?
You mean the Porcine Cliff?
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Old 01-02-2013, 08:57 AM   #39
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You mean the Porcine Cliff?
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Old 01-02-2013, 09:03 AM   #40
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This market bump from the cliff thingy agreement made it a perfect time for me to get my asset allocation re-balancing out of the way for 2013
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