As the end of the year comes ever closer, and Congress gets ready to adjourn for the year, there has still been no action on the expiring 2001 and 2003 bush tax cuts. If the tax cuts were to expire on December 31st, we would see tax increases for everyone who pays taxes. Neither the Democrats or Republicans want that to happen, but there is disagreement about who the tax cuts should be extended for.
The Republicans want to extend them for everyone saying that they are needed to stimulate the economy in the tough economic climate we currently are in.
The Democrats want to extend the tax cuts as well, but only for those making under $250,000. If you make over that amount they want the tax cuts to expire saying that the impact to the deficit of extending the tax cuts for high income earners would be just too great.
No Action Yet On Bush Tax Cuts
As of today, December 1st, there has been no action yet on extending any of the tax cuts. The two sides just can’t seem to agree. President Obama created a task force yesterday to to try and find some common ground on the issue, and come up with some sort of resolution before the Holiday recess.
A bipartisan panel trying to negotiate a deal to extend some or all of the Bush-era tax cuts ended its first meeting Wednesday morning the same way it began: with members at odds.
The group, tasked by President Barack Obama on Tuesday to come up with a deal on the tax-cut issue, includes Treasury Secretary Timothy Geithner, Office of Management and Budget Director Jacob Lew, Senate Finance Chairman Max Baucus (D-Mont.), Senate Minority Whip Jon Kyl (R-Ariz.), incoming House Budget ranking member Chris Van Hollen (D-Md.) and presumptive Ways and Means Chairman Dave Camp (R-Mich.). But after their initial session, members offered few details about their discussions and appeared to have made little progress.
Baucus declined to give a timeline for reaching an agreement. “We’ll have a deal when we have a deal. If we have a deal,” he said.
However, sources familiar with the talks said Democrats used the meeting to press for a vote to extend the tax cuts for middle-income Americans. Republicans, meanwhile, refused to budge from their position that the Bush tax cuts be extended for all income earners.
So it sounds like the special task force hasn’t made much ground, beyond having the parties restate their opinions. Today the GOP has made a stand and sent a letter to Harry Reid stating their intentions to not vote for cloture any other bills until the government is funded beyond this week, and the bush tax cuts are addressed.
All 42 Senate Republicans have signed a letter refusing to vote for cloture on any bill before the Senate until the federal government is funded beyond this week and the Bush-era income tax cuts are addressed before they expire December 31.“We write to inform you that we will not agree to invoke cloture on the motion to proceed to any legislative item until the Senate has acted to fund the government and we have prevented the tax increase that is currently awaiting all American taxpayers,” said the letter, which was sent to Senate Majority Leader Harry Reid this morning.
Reid acknowledged that the passage of several of his legislative priorities would need Republican votes, and that this essentially means nothing else will get done until tax cuts are addressed.
What Will Happen To The Bush Tax Cuts?
When it comes down to it, most people are thinking that the Bush tax cuts will be extended in some form. The only questions are – for everyone or for some – and permanent or temporary? The White House has made it clear that lawmakers must do something.
Geithner and Lew appear to be stuck in the middle, sources said. A senior Democratic aide said that the White House’s message has been clear: “You can’t leave town without doing something.”
Sources have predicted that the final agreement could include a full extension of the tax cuts for two to three years and an extension of unemployment insurance and a package of other tax extenders.
So it sounds like most people are thinking that the tax cuts will be extended for everyone, at least temporarily. So in effect they’re choosing not to deal with the issue permanently, but kick the can down the road a couple of years.
What do you think about extending the Bush tax cuts? Are you for or against it? Would you extend for some, but not for others? Do you think taxes are too low, spending is too high, or both? What do you think will happen? Tell us your thoughts in the comments.
Peter, thanks for the continued follow-up on this subject. This issue was one of the key topics when President Obama ran for election. If that is any indication there are many that would like to see the tax breaks for those making over $250,000 repealed. However, those in that higher income bracket do tend to have more clout and participation in the political arena. Whether it’s tax breaks or welfare checks it all comes out of the same pockets.
My husband and I are being hit on all sides by increases just like most other americans. Our property taxes climbed again this year, almost all of utilities have had rate increases and we all know about food and gasoline prices. Our medical premiums increased, along with our co-pays for Dr. visits and prescriptions. We are being squeezed more than we have ever felt in our 25 years of marriage.
Just wait for the health care program to kick in. that will increase rates across the board even more! *sigh.
Just a quick note on the issue of health care. Two of our doctors retired this year because of the impending health care changes. Not a good omen.
I think that we are unfortunately seeing the results of what happens when you get an amateur politician in the White House who knows nothing about business.. and refuses seek advise from people who do.
We are a local homebuilder who (pre Obama), built about 5-6 houses per year. In the last two years we’ve built ONE house. What does that mean to our subcontractors? Take the framer; that’s the difference between about $150,000 per year to approx.t $30k for the one house. Which brings me to the misleading $250k mark on the tax cuts. Take above example, that $150k that used to go to the framer was obviously not all profit for him. But give him two builders at that revenue, and you have our little framer looking like a ‘rich’ $250k plus guy.
Most likely Obama will have to succumb to the tax cuts. Then we block $ going to the ridiculous Health Care Bill. Get Obama out. Repeal the Health Care, and by golly, we are on our way back to prosperity.
As a small business owner, we are waiting it out. Fortunately I have a super conservative husband who saw this coming and planned ahead, so we have the luxury of laying low until the economy rebounds.
My father in law is a homebuilder as well, and things have been extremely rough in that sector. The current administration really isn’t very business friendly as you mention, and a lot of small business owners like my father in law and folks like you (and your subs) are the ones suffering. Business that my father in law used to give to his subs just isn’t there anymore and a lot of them are going under. Not good.
By identifying that you built 5-6 houses Pre-Obama are you suggesting that it is Obama’s fault you now only do one per year?
I’ve heard a lot of people complaining about the removing of the tax cuts for people over 250k a year. The problem is that our huge and growing deficit can not be significantly reduced by reducing spending alone. Taxes have to be raised in order to get closer to balancing the budget. It sucks but it is reality. Middle income Americans can not afford to be taxed any higher than they currently are. If you want to make an argument that small businesses need a break and should be included in the tax cuts then I’m all ears. But to suggest that the tax cuts to ALL should be extended will get us even further from reducing the annual deficit and is something I could never support.
I agree. It is the people being squeezed in the middle that are being the hardest hit. Make too much for benefits, not enough for tax accountants to design their tax structure. To have an impact on reducing the country’s debt we need to cut what we hand out and this includes the hard cash payments and the soft accounting tricks of tax cuts. And, it’s not just at the federal level. State sales taxes are up to 17% in some states, county level property taxes have doubled in some areas. This situation was not created by Obama, it was created by the banking industry and ushered in by both parties. Included is a link to a post about the myths of the economic crisis that I hope will be helpful. http://inthetrenches2009.blogspot.com/2010/09/us-poverty-on-track-to-post-record-gain.html