Home > Democractic, Economics, Fiscal Cliff, Fiscal Policy, Politico, President, Uncategorized, US Budget > Fiscal Cliff: effects on taxation and revenues!!

Fiscal Cliff: effects on taxation and revenues!!

The more one learns about the “Fiscal Cliff” (The Postal Accountability and Enhancement Act) the more we know and that is an empowering educational tool for the voting populace. Now let’s look at why Republicons are so afraid of the fiscal cliff and the accompanying expiration of the Bush tax cuts. Once America understands the fundamental underpinnings of the fiscal cliff in terms of taxation the more un-cliff’like they may find it. Fiscally it is appealing in many aspects seeing that a lot of it impacts the rich and dividend investors and furthermore increases revenue.

The scariest aspect of the fiscal cliff for Republicons is, dare WE say, returning the top marginal tax rat to 39.6% (which is the rate under Clinton, you know the president that gave us a surplus) from the current 35%, but wait there’s more. Not only will the top marginal rate return to reasonable level, but it will also raise capital gains tax rates to 20% from the ridiculous maximum rate of 15%. In my humble opinion, the top marginal income tax rate should have never been lower than 50%, for reasons that I will address in another blog. I even dare to contest the special treatment of capital gains; I think that capital gains should be taxed as normal income, period (again, I will address that in another blog). Another revenue increasing result of the fiscal cliff would be that stock dividend income would be taxed as regular income and that would be a beautiful thing and I would call it “a start towards fiscal sanity”!

The beauty, in my estimation, or the danger, in the estimation of the rich and the Republicon party, in the fiscal cliff kicking in is that there will be more cuts to loop-holes and tax breaks which primarily benefit the rich. For example, Estate taxation, or the death tax as conservatives call them, would go up by changing the estate tax that currently only applies to those inheriting over 5.1 million to anyone inheriting one million dollars or more,  (boo hoo). This would mean anyone inheriting over 1 million dollars would have to pay a 35% estate tax. Another topper would be that the AMT (alternative minimum tax) would also change in aspect of who would be subjected to it. So far, the changes that could take effect does not make 99% of the United States populace worry or fearful of this cliff that everyone is talking about; although I could be just fiscally naive. The so-called fiscal cliff has some bearing on the Affordable Care Act (ObamaCare). Apparently there is a 3.8% medicare surtax that will be implemented on wage earners making over $200,00 and families making over $250,000 annually.

There are other tax implications that I will not burden you with now; I want you to come back to my blog and me being too wonky will not accomplish that. In all the concerns such as these tax expiration and/or increases negatively affecting dividends, the rich retaliating, and the possibility of job losses are not all that concerning to me seeing that a great portion of these fears have been addressed by this article Economic Effects of Reducing the Fiscal Restraint That Is Scheduled to Occur in 2013 and this article by Glenn Kessler.

I end with this, although I have given quite a level of praise at some of these potential cuts, I am not for this version of austerity during our current weak economy. The way to strengthen our economy must include extending the Bush/Obama tax rates for those making $250,000 or less and by government investment in our nation for the short-term and long. The use of the  phrase “investment” is intentional. Many on the right would call government “investment” in America stimulus, but  I have a surprise for all those on the right; stimulus does just that stimulate the economy when applied to infrastructure, education, job training, and temporary fiscal support.

I am not against cuts, but they should be enacted through legislation and when our economy is strong enough to absorb them. A much more rational and fiscally sound approach to cutting expenditures is to put cuts similar to sequestration into effect when the unemployment rate is at 5% and we have had substantiated economic growth of 2.5% over multiple quarters (a minimum of 2 quarters). This can be accomplished via legislation that would have the triggers that react once those conditions are met, but I reiterate “only when those conditions are met”!  It is time to restructure our economy’s underpinnings and fiscal focus, but with purposeful direction and long-term growth as our guild-lines. The nation having debt in the pursuit future fiscal strength is not a vice, but having the same debt without any meaningful investment in United States of America is unforgivable.

C’mon Congress and President let’s be debt smart (infrastructure, education, universal healthcare, job training, and manufacturing), not debt stupid (wars and tax breaks)!

  1. November 30, 2012 at 6:49 pm

    I don’t even know how I ended up here, but I thought this post was good. I don’t know who you are but definitely you are going to a famous blogger if you aren’t already 😉 Cheers!

    • December 4, 2012 at 9:50 pm

      Welcome to my blog Heather. It is great to hear from others that have a level of curiosity about our political world. I am not sure how you ended up here either, but your visit is more than welcome and i encourage you to visit again and share your ideas or your very own blog. I am not sure about your claim that I will be a famous blogger,but it is much appreciated and I aspire to live up to that lofty pedestal that you set.

      I am currently only blogging sparingly and with primarily the accumulated knowledge of politics and legislation that I got over time. I look forward to hearing from you again soon, Do svidanya (until we meet again). 😀

  2. December 4, 2012 at 5:38 am

    You made some really good points there. I looked on the net to find out more about the issue and found most individuals will go along with your views on this website.

    • December 4, 2012 at 10:03 pm

      Filme, thank for visiting my blog and I look forward to learning from and with you in the coming days; if my blog warrants another visit by you. You stated “You made some really good points there” and I could not help but wonder which points you found salient and would you like to expound on them or any others.

      I see that you are a film enthusiast. I too share your love of movies of all genres although I don’t write about it; I would like to share a friend of mine’s movie website. Please visit http://guygordon.com/, he has an interesting take on films and is an advent movie goer. I see that you both have a great love of movies and may have some interesting discussions about cinema. Again, it was great to hear from you and I hope that you visit again.

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