Tax Cuts Extended to All Americans

[samclem]

The real "treat" will be when our elected economic geniuses decide to give everyone a raise by cutting the employee SS contribution by 4% and add it on to the "employer's side" of the SS tax. Employees won't make any additional money over time, but the sponsors will be able to say they gave everyone more money to spend without increasing the deficit. I think most people would believe it, too.

 

[BTravlin]

Your friend is pretty fortunate especially compared to mine. Having surviving two bouts of (different) cancers his Cobra was $1300 month for a 55 year old, fortunately he qualified for VA and switched to them a year ago. Everytime they pass an extension he calls up the unemployment office and they tell sorry you were laid off to early to qualify for the extensions so he got the basic 26 weeks.

Sorry to hear your friend is having a rough time.

In a way, they are unwitting market timers.

 

[LOL!]

They are no longer talking about maintaining the status quo. They are talking about cutting my taxes significantly.

I don't need 5 or 6 new humongous flat-screen HD TVs, but thanks for the tax cut anyways.

I just cannot believe that most Americans would allow these tax cuts that benefit the wealthy so disproportionately.

 

[samclem]

I just cannot believe that most Americans would allow these tax cuts that benefit the wealthy so disproportionately.

I guess it depends on what you call a tax cut (e.g. what is the starting point for the cut). If we start from the present tax rates, then "the wealthy" will be hit disproportionately hard by the change being proposed.

1) They benefit far less from the temporary reduction in SS taxes.
2) The tax rate at the highest bracket goes up 4.6% Do the lower bracket rates go up?
3) The tax on estates over $5 million goes from zero % today to 35%. That probably affect more of the wealthy than the poor.

 

[MichaelB]

I just cannot believe that most Americans would allow these tax cuts that benefit the wealthy so disproportionately.

It is hard to understand. But every effort to turn this into a national issue has fallen flat.

Maybe it is because we haven't yet begun to cut back on gov't spending, so there are no current losers (yet). Once we start reducing current budgets that may change.

 

[Danmar]

Tax cuts for the wealthy would never fly in Canada. Canadians generally resent wealth(in others) as opposed to American who generally celebrate it. I think in this case though you might want to act more like Canadians?

 

[FinanceDude]

Tax cuts for the wealthy would never fly in Canada. Canadians generally resent wealth(in others) as opposed to American who generally celebrate it. I think in this case though you might want to act more like Canadians?

So, Canada doesn't like rich people?

 

[FinanceDude]

I just cannot believe that most Americans would allow these tax cuts that benefit the wealthy so disproportionately.

Uh, because in this country, THEY are the ones creating jobs??

 

[MichaelB]

Uh, because in this country, THEY are the ones creating jobs??

I'd love to see some evidence to support that claim.

 

[samclem]

It is hard to understand. But every effort to turn this into a national issue has fallen flat.

Maybe it is because we haven't yet begun to cut back on gov't spending, so there are no current losers (yet). Once we start reducing current budgets that may change.

You are probably right. As it is, those trying to "rally the base" just sound like holdover Bolsheviks vowing to "fight" (??) and not "give away so much to the rich." People are ready for a positive message, and this isn't it.

This bill increases spending (extension of unemployment benefits), and reduces taxes on almost everyone. It contains very little pain. It's bizarre that some politicians are saying that this is where they need to draw the line, stop the Republicans, "this is our Gettysburg", etc. There could hardly be a worse tactical place to make a stand. There will be other opportunities, but this ain't it. Who would be most likely to be upset by this bill? Deficit hawks (usually aren't Democrats--a generalization, I know, but I think it's valid).

 

[rescueme]

I'd love to see some evidence to support that claim.

I won't comment, but here's an interesting article/letters from an "unbiased" source:

FactCheck Mailbag, Week of Sept. 28-Oct. 4 | FactCheck.org

 

[Danmar]

So, Canada doesn't like rich people?

Generally not. Or at least think they should pay more to support the kind of things the average guy likes- ie pensions, health care, unemployment insurance, etc.

 

[FUEGO]

Generally not. Or at least think they should pay more to support the kind of things the average guy likes- ie pensions, health care, unemployment insurance, etc.

Keep the masses contented. Give them the modern day version of bread and circuses, and you will keep the unrest to a minimum.

 

[Texas Proud]

I have a friend who was involuntarily ER'd by MegaCorp right after the crap hit the fan and he's still drawing unemployment. Has allowed him a two year deferral on tapping his retirement funds and now he's getting a third.

At one point he decided he couldn't keep taking the money so he quit filing. A helpful government employee called him two months later and encouraged him to sign back up as they had plenty of funds. So he did.

To me, this is one of the big mistakes we are making.... guaranteed employment... if you continue to get an unemployment check you are in effect being paid not to work... and now for a third year...

I am sure a lot of the people who are not working would find some kind of job if their benefits stopped... back in the 80s, I had a friend who lost their job... and eventually got a job paying $8 per hour for almost 2 years... then the economy picked up and they worked their way back up... this should be the way it is...

 

[MichaelB]

I think state governments can do many things to encourage job creation. The federal gov’t can as well, although they are less effective because of their federal nature. Partnership efforts between businesses and states could have a significant positive effect. Business tax policy improvements would help.

Lower tax rates that favor high earners don’t come to mind when choosing policy options to generate jobs or achieve fiscal reform.

 

[ziggy29]

To me, this is one of the big mistakes we are making.... guaranteed employment... if you continue to get an unemployment check you are in effect being paid not to work... and now for a third year...

OK, in spirit I agree -- but with real unemployment around 16-17%, what's the alternative?

 

[FIREd]

Coming from a country where taxing the rich is the first answer to any fiscal problem, I am baffled by the willingness of Americans to extend my tax cuts and give me an additional bonus (payroll tax cut) at a time when they face much hardship and I don't. I will donate my tax cuts to the Food Bank and other charities in 2011 and 2012. They need the money more than I do. I also think that there is the potential for a backlash against the rich down the road, so keeping a low profile seems like a good idea.

 

[ziggy29]

Coming from a country where taxing the rich is the first answer to any fiscal problem, I am baffled by the willingness of Americans to extend my tax cuts and give me an additional bonus (payroll tax cut) at a time when they face much hardship and I don't. I will donate my tax cuts to the Food Bank and other charities in 2011 and 2012. They need the money more than I do. I also think that there is the potential for a backlash against the rich down the road, so keeping a low profile seems like a good idea.

The bottom line is that no one likes to be taxed more, but ultimately the fates of "the rich" are only as secure as maintaining civil order and avoiding a "peasant revolt" (many of which have occurred because too much wealth was concentrated in the hands of too few). So if throwing a few bones to the lower and middle classes can prevent the underclass from storming the gates with torches and pitchforks, it's not the worst thing that can happen for the wealthier folks.

I do believe we are living in increasingly scary times, with a shrinking middle class and increasing gaps between the haves and the have-nots, and I hope it can stabilize or reverse before the have-nots feel like the ballot box isn't enough to turn the tide.

 

[FUEGO]

To me, this is one of the big mistakes we are making.... guaranteed employment... if you continue to get an unemployment check you are in effect being paid not to work... and now for a third year...

I am sure a lot of the people who are not working would find some kind of job if their benefits stopped... back in the 80s, I had a friend who lost their job... and eventually got a job paying $8 per hour for almost 2 years... then the economy picked up and they worked their way back up... this should be the way it is...

+1

I have a friend that is still holding out for the exact same kind of job he used to do at the same salary. But in the meantime he is about 18 months into collecting unemployment. He has not expressed interest in a couple of part time possibilities I have floated his way (he didn't turn them down because I wasn't in a position to "offer" him the jobs, he just didn't pursue the possibility of jobs).

When we talk about the what if's of exhausting the full 2 years, he says he will find "something". Loading boxes on a truck if he has to just to pay his mortgage and get by. Single guy with no dependents and no debt other than the mortgage. He is getting by just fine on his $26k/yr.

 

[ziggy29]

I have a friend that is still holding out for the exact same kind of job he used to do at the same salary. But in the meantime he is about 18 months into collecting unemployment. He has not expressed interest in a couple of part time possibilities I have floated his way (he didn't turn them down because I wasn't in a position to "offer" him the jobs, he just didn't pursue the possibility of jobs).

I think this is a good example of why we need to sever the ties between employment and health insurance. Part time jobs almost never provide health insurance, so even if *monetarily* two 20-hour jobs paying $15 per hour appears the same as one full-time job at the same hourly rate, the part time jobs don't offer health insurance so they are often non-starters in terms of consideration. Separate health insurance from employment and there becomes less need to reject otherwise perfectly good part-time gigs.

 

[Danmar]

The bottom line is that no one likes to be taxed more, but ultimately the fates of "the rich" are only as secure as maintaining civil order and avoiding a "peasant revolt" (many of which have occurred because too much wealth was concentrated in the hands of too few). So if throwing a few bones to the lower and middle classes can prevent the underclass from storming the gates with torches and pitchforks, it's not the worst thing that can happen for the wealthier folks.

I do believe we are living in increasingly scary times, with a shrinking middle class and increasing gaps between the haves and the have-nots, and I hope it can stabilize or reverse before the have-nots feel like the ballot box isn't enough to turn the tide.

I agree. Although your rhetoric is a little colorful for me.

 

[ziggy29]

I agree. Although your rhetoric is a little colorful for me.

I'm not saying it would necessarily lead to full-scale revolt, but there could certainly be an increase in "civil disobedience" and "nonviolent resistance" at a minimum if the "wealth gap" continues to widen and the middle class continues to shrink. I'd sooner not test the theory anyway...

 

[youbet]

What can I say I screwed up, I trusted Alan that it was an employer cut.

You are probably right the 2% will be helpful for folks filling gas tanks as they travel around the area applying for jobs along with 1,000s of others. Oh wait unemployed folks don't pay payroll tax. I have a friend who get laid of in the summer of 2008 right before all the crap hit. Because he was an early casualty he has missed out on all of the extensions including this one.

Doesn't work that way in Illinois. Even if your original 26 wks expired before the extensions were enacted, you can go back and restart. With many of my buddies having been RIF'd from the MegaCorp where we toiled, I see this all the time.

Boomers getting the axe in late career pencil in UI benefits as a normal part of FIRE planning these days. Laid off at 60? Great! Collect UI benefits for 2 yrs and then start SS. There is no significant amount of auditing for evidence of a job search going on. Therefore UI in many cases is simply a gap filler until other retirement benefits start for many senior lay off victims.

 

[myself]

So, is anyone that is still w*rking, going to ship the 2% SS reduction into 401K, or after tax Roth?
I think I'm going to opt for the 401K, since it's only scheduled for a year. If it's extended much past that, I'll probably shift it into the after tax Roth.

 

[Independent]

To me, this is one of the big mistakes we are making.... guaranteed employment... if you continue to get an unemployment check you are in effect being paid not to work... and now for a third year...

I have a friend who was involuntarily ER'd by MegaCorp right after the crap hit the fan and he's still drawing unemployment. Has allowed him a two year deferral on tapping his retirement funds and now he's getting a third.
.

I don't know how this "third year" business got started. In some states, workers could get up to 99 weeks of unemployment due to prior extensions. Those extensions ran out at the end of November. Without this renewal of the extensions, benefits would have stopped sometime after 26 but before 99 weeks. The renewal just gets back to 99 weeks.

The maximums vary by state, depending on the unemployment rate in that state. Here's a table for NY: New York State Department of Labor - Breakdown of Additional Benefits