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House passes bill to avert Fiscal Cliff
01-01-2013, 10:01 PM
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#1
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 38,145
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House passes bill to avert Fiscal Cliff
Just in case you missed it!
I, personally, am dancing about the permanent AMT patch. 2012 taxes were looking pretty steep for me without this patch.
It looks like 15% rates on qualified dividends and long-term capital gains up to $400,000 of income where it increases to 20% on both. In other words, qualified dividends will NOT be taxed as ordinary income rates.
These tax cuts are permanent.
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01-01-2013, 10:13 PM
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#2
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Thinks s/he gets paid by the post
Join Date: Sep 2009
Location: Hong Kong
Posts: 1,688
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Good news for many retirees I expect.
The other thing I took away from this is that the expectation that the there will continue to be substantial deficits suggests that interest rates may well remain low for longer than would otherwise be the case. I'm not sure whether that is good news or bad news for my investments.
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Budgeting is a skill practised by people who are bad at politics.
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01-01-2013, 10:14 PM
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#3
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2008
Posts: 13,149
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I saw the news too.
Usually, I don't look at the market, but it'll be interesting to see what happens tomorrow.
Asia's already gone up because of the deal.
http://www.marketwatch.com/story/asi...ist=tcountdown
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Have you ever seen a headstone with these words
"If only I had spent more time at work" ... from "Busy Man" sung by Billy Ray Cyrus
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01-01-2013, 10:16 PM
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#4
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2005
Posts: 10,252
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There is good and bad in this bill, but my low tax rates are safe for quite a while. Somebody will have to pay the Piper, but it's not me.
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01-01-2013, 10:19 PM
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#5
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2004
Location: SW Ohio
Posts: 14,404
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This is the "balanced approach" we were promised--we'll all get to see how the tax increases (compared to the taxes paid last year) compare to the spending cuts.
And it's just one more month until we have another debt ceiling battle with all the attendant hand-wringing in the bond market.
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01-01-2013, 10:34 PM
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#6
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Apr 2003
Location: Hooverville
Posts: 22,983
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IMO, it is a pretty good outcome. Basically it was a kick the can act, which at least will leave us some space to maneuver.
Our real problems will be addressed if and only if things get as bad or worse than Greece. I think the Act is ridiculously progressive, but not nearly so bad as it might have been. With luck eventually we will realize that a VAT is the only thing likely to work. Otherwise, the "middle class" will also be income taxed much more heavily. It is my opinion that there are limits to what can be extracted from the rich. Overall, they are smarter, more highly motivated to prevail, and with all kinds of institutional advantages. At no time in history would this have been an accurate description of a class that put up for long with paying an outside share of government expenses, unless somehow they were getting even more back.
My broker was calling me trying to get me to recognize gains while it would cost me only 15%. I told him no way are they going to do anything more radical than kick the can. I pay 15% now; and I'll pay 15 % next year and likely for at least a while after that. So expect no trading from me over this issue.
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
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"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
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01-01-2013, 10:46 PM
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#7
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Thinks s/he gets paid by the post
Join Date: Feb 2007
Posts: 2,526
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Quote:
Originally Posted by haha
IMO, it is a pretty good outcome. Basically it was a kick the can act, which at least will leave us some space to maneuver.
Our problems will be addressed if and only if things get as bad as Greece.
I think the Act is ridiculously progressive, but not nearly so bad as it might have been. With luck eventually we will realize that a VAT is the only thing likely to work. Otherwise, the "middle class" will also be income taxed much more heavily.
My broker was calling me trying to get me to recognize gains while it would cost me only 15%. I told him no way are they going to do anything more radical than kick the can. I pay 15% now; and I'll pay 15 % next year and likely for at least a while after that. So expect no trading for me over this issue.
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
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My feelings as well. Exactly why I sold nothing and why I just started my SS payments at 62. By the way, that SS deposit notice showing up is mighty nice.
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01-01-2013, 10:50 PM
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#8
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Apr 2003
Location: Hooverville
Posts: 22,983
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Quote:
Originally Posted by ejman
My feelings as well. Exactly why I sold nothing and why I just started my SS payments at 62. By the way, that SS deposit notice showing up is mighty nice.
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Yes; I evaluated it differently in 20011 and paid back my SS to restart. I think now that this was not a very good decision.
Ha
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"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
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01-01-2013, 10:57 PM
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#9
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Oct 2006
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The problem is that road, we kicked the can down, ended long ago. It is like Wiley Coyote chasing the Roadrunner over the cliff, he is able to run on thin air for while until he looks down. At which point he experiences a very painful fall.
I suppose it is possible that at some point in the future the Congress will gets act together and behave like adults to address the long term structural problems the country faces. It is also possible that now that Hefner is married that all of his blonde girlfriends are going to want to date me at once.
I figured there was a reasonable chance that we'd see a cap gain rate increase to 20% so I did sell one overprice stock a couple of days ago in order to lock in the 15% capital gains rate. If I had known we still would have a 15% rate I wouldn't have bothered.
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01-01-2013, 11:14 PM
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#10
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
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I just noticed that the $450,000 threshold for families regarding ltcg and qualified dividends is $400,000 for single taxpayers. Pretty heavy marriage penalty. Likely not good for the country, but gives me more than enough room.
BTW, I am listening to House Members spin on the passage of the bill. Very interesting; it appears that no matter what the outcome might be, it reflects well on each party.
Ha
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"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
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01-02-2013, 12:31 AM
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#11
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Full time employment: Posting here.
Join Date: Nov 2010
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I expected better. Kicking the can down the road doesn't even meet my low expectations of politicians.
I put as much as I can into Roth IRA's and Roth 401K's. I would have done better to have invested with post tax cash in cash this past year. I STILL stubbornly will stick to my plan. Why? My recollection of history has shown difficult periods that the rich and elderly are targeted to take their wealth. With the large numbers of baby boomers being flush with saved retirement money, I don't see how politico's can help but go after that pile, to make it their own. Greed will always target wealth builders and savers. Each party does it.
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01-02-2013, 04:08 AM
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#12
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2008
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Limited progress, but progress nonetheless IMO. Right or wrong, I was surprised they had the "courage" to let the payroll tax holiday lapse.
Stay tuned (for dealing with spending?)...
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01-02-2013, 04:08 AM
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#13
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Thinks s/he gets paid by the post
Join Date: Dec 2012
Location: Georgia
Posts: 2,240
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The 15% rate on dividends and capital gains (we're well under $400k!) surprised me. I was riding a wave this year... trying to keep our AGI low enough to qualify for direct Roth contributions (before I learned about Roth conversions), but still trying to reconfigure a very messy portfolio, which was more a reflection of my late mother's penchant for owning dozens of itty-bitty holdings. I was very worried about how much loss harvesting I did this year (to keep my AGI low), given that the experts were saying to hold off doing that until next year when the capital gains tax was thought to be significantly increasing for everyone.
I'm still wondering if the bill scuttled the Backdoor Roth approach. I hope we get a definitive answer to that soon. Wherever I've seen folks go over the few paragraphs that relate to it, there is general disagreement about how the IRS will administer the change, with some saying that the pro rata rule will extend to include 401(k)s and others saying that 401(k) money and IRA money will be kept separate.
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01-02-2013, 04:57 AM
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#14
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Administrator
Join Date: Jan 2008
Location: Chicagoland
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The AMT fix is nice. Glad I didn't sell anything.
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01-02-2013, 05:24 AM
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#15
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Thinks s/he gets paid by the post
Join Date: Mar 2010
Posts: 1,994
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I didn't sell anything either. Did not want to increase my tax bill regardless of 15% or 20%. As it is, it would have stayed the same. Trying to delay incurring more taxes until my income decreases in 2014.
Happier with the $450K threshold than I was with the $250k threshold but am on alert as it has been signaled this is not the end of new increases in other forms of taxation or revenue generation. Not happy there were not some spending cuts included. While I understand spending cuts can upset the overall GDP, our government must do a better job of allocating the revenues.
Also I'm assuming the extra 3.8% on dividends, cap gains and K1 income under ObamaCare remains at the $250K threshold. Is this correct or will that be modified to the $450K level?
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01-02-2013, 05:47 AM
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#16
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
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The debate over the cuts will be interesting. I predict that if push comes to default, Obama will exercise one of several options to ignore the debt ceiling. Unfortunately that could ultimately allow the sequester to go into effect. Those 10% reductions seem eventually doable but it would be unfortunate if they were not postponed until the economy improved and then gradually trickled in.
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01-02-2013, 05:49 AM
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#17
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Administrator
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01-02-2013, 05:56 AM
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#18
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01-02-2013, 06:07 AM
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#19
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Join Date: Dec 2012
Location: Georgia
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As someone who's taxes didn't go up as high as they would, I can attest that this taxpayer is relieved.
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01-02-2013, 06:12 AM
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#20
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
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Quote:
Originally Posted by LOL!
There is good and bad in this bill, but my low tax rates are safe for quite a while. Somebody will have to pay the Piper, but it's not me.
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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.
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