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Taxes and fiscal cliff

Races for the Senate, U.S. House, etc. and other issues of national importance.

Re: Taxes and fiscal cliff

Postby johnfajardohenry » Sun Dec 30, 2012 2:10 pm

H&R Block is apparently sending out emails to this effect to tens of millions. As I understand it, the email says that people who are expecting $1,000 or so in refunds may wind up paying $2,000 or more in extra tax as the AMT kicks in.

I could not find a copy of the e-mail but did find this article on their website:

34 million could owe additional tax if AMT not raised for 2012 income levels

Unless there is legislative action, 34 million taxpayers could be hit with the alternative minimum tax – many for the first time. This could mean that in just two months, taxpayers who had grown accustomed to getting a tax refund could be hit with a hefty tax bill.
<snip>


http://www.hrblock.com/press/Article.js ... leid=60692

Enjoy the ride.

This is what you get when the govt tries to soak "the rich". It turns out "the rich" are anyone who makes much over the minimum wage.

BTW: We really don't tax the "rich" at all. We have no wealth taxes in the US. When they speak of "rich" the deep thinkers are really talking about high income earners. Who may or may not be rich. Just as low income earners may or may not be rich. This is why Warren Buffett historically paid so little in taxes. He had relatively little income to pay it on. At least compared to his wealth.

Perhaps we should tax wealth instead of or in addition to income. But we don't.

This is going to really screw with Block's 2013 earnings. They apparently make a lot of money by factoring tax returns. They find you have a refund of, say, $1,000 coming. They make you an offer: "Why wait on the IRS to send you a check? Sign the $1,000 over to us and we will give you a check for $800 right now."

It works out to an interest rate that makes shylock Vinnie the Nose down on the corner look positively charitable.

But if you are not getting a refund, they can't do that deal.

OTOH, they are do have a consumer finance arm. So they will probably be happy to loan you the money you need for the IRS. I doubt they charge more than 30-40% interest.

Worse is better but how much worse will it have to get?

John Henry
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Re: Taxes and fiscal cliff

Postby HawkHead » Mon Dec 31, 2012 9:30 am

I was reading not logged in and so I saw Johnfarjalosers post above.

The AMT issue has nothing to do with the fiscal cliff. Every year congress passes an extenders bill that contains R&D credits, energy efficency credits and an AMT patch along with others.

It just happens that is being overshadowed by the cliff stuff that was set to happen at the beginning of a new tax year.

When the AMT was established Congess didn't put in an inflationary growth factor into the AMT standard deduction which was passed in 1982. The AMT patch adjusts the standard deduction for inflation.
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Re: Taxes and fiscal cliff

Postby DCB » Mon Dec 31, 2012 7:58 pm

HawkHead wrote:The AMT issue has nothing to do with the fiscal cliff.

Jar-jar Henry is very confused. See also his 'soak the rich' comment. Whatever that means.
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Re: Taxes and fiscal cliff

Postby gargantua » Tue Jan 01, 2013 12:06 pm

Included in today's news accounts was word that the alternative minimum tax patch is part of the deal. In the future it will be indexed to inflation so it won't continue to be an annual housekeeping chore for Congress.
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Re: Taxes and fiscal cliff

Postby snoqueen » Tue Jan 01, 2013 12:44 pm

The Washington Post has the best summary of the details I've seen yet, along with a cheery picture of Joe Biden, man of the hour:

http://www.washingtonpost.com/blogs/won ... l/?hpid=z1

There's a lot to like: extension of unemployment compensation and expansion of EITC and Child Tax Credit to help the poorest families, credit for college tuition, and last but not least a freeze on pay for members of Congress. Taxes rise for people making over $400,000, who are hard to sympathize with if they whine.

Now let's watch the outrage while we try to make some cuts to the military. That should be entertaining.
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Re: Taxes and fiscal cliff

Postby fisticuffs » Wed Jan 02, 2013 11:14 am

According to Fox this deal is comparable to what caused the American Revlolution, and there could be riots in the streets. Boehner tells Reid to "go fuck himself". And we get to do it all over again in two months.
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Re: Taxes and fiscal cliff

Postby jjoyce » Wed Jan 02, 2013 11:33 am

Keep up the left vs. right, Boehner vs. Cantor or Reid or Obama stuff. It's gripping! Really. Millions enjoy cable news and talk radio and stuff like this is why.

Meanwhile, my (quite middle class) taxes just went up while Nancy Pelosi was thanking John Boehner.

Obama described the bill as “preventing a middle-class tax hike” that could have hurt families and sent the country back into a recession; that is true, but it allowed another middle-class tax hike that could have the same effect. He also said that middle-class families “will not see their income taxes go up.” That is false, unless one goes along with the idea—and most of Washington does—that payroll taxes, which are on income and levied by the federal government, are not federal income taxes.


For a look at how much more you'll be paying in taxes, check this handy calculator at the Wall Street Journal. Play with it a bit and you might discover why this is infuriating.

Someone making $20k will see an increase of $400 (2%).
Someone making $40k will see an increase of $800 (2%).
Someone making $80k will see an increase of $1600 (2%).
Someone making $160k will see an increase of $2274 (1.4%).
Someone making $320k will see an increase of $2274 (0.7%).
Someone making $640k will see an increase of $2274 (0.35%).
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Re: Taxes and fiscal cliff

Postby fisticuffs » Wed Jan 02, 2013 11:37 am

The payroll tax was supposed to be temporary and every year we had it it was weakening social security, I'd personally like it to be there when I'm of age. Of course they could easily add years to it's solvency by raising the cap from 114k but something tells me one side of the left v. right dynamic wouldn't let that.
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Re: Taxes and fiscal cliff

Postby jjoyce » Wed Jan 02, 2013 12:08 pm

Yes, excuses are plentiful and easy to come by. But don't try to sell a middle class tax cut, because I'm middle class and this looks a lot like a tax hike, and one that is not unsubstantial. And if you think Social Security is going to remain relevant for our generation, regardless of the payroll tax, then you're an optimist. I don't believe we'll see a cent of it.

Apply what John Boehner said to Henry Reid to every elected official in Washington. Every single one.
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Re: Taxes and fiscal cliff

Postby Francis Di Domizio » Wed Jan 02, 2013 12:26 pm

jjoyce wrote:Apply what John Boehner said to Henry Reid to every elected official in Washington. Every single one.


They should all go fuck Henry Reid? Wouldn't that take away time from them fucking the rest of us?
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Re: Taxes and fiscal cliff

Postby Detritus » Wed Jan 02, 2013 12:39 pm

Francis Di Domizio wrote:
jjoyce wrote:Apply what John Boehner said to Henry Reid to every elected official in Washington. Every single one.


They should all go fuck Henry Reid? Wouldn't that take away time from them fucking the rest of us?

You say that like it's a bad thing.
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Re: Taxes and fiscal cliff

Postby Francis Di Domizio » Wed Jan 02, 2013 12:45 pm

Detritus wrote:
Francis Di Domizio wrote:
jjoyce wrote:Apply what John Boehner said to Henry Reid to every elected official in Washington. Every single one.


They should all go fuck Henry Reid? Wouldn't that take away time from them fucking the rest of us?

You say that like it's a bad thing.


Not at all, I'm just not certain what would motivate them to such an act of benevolence.
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Re: Taxes and fiscal cliff

Postby kurt_w » Wed Jan 02, 2013 12:56 pm

The past couple of years of payroll tax "holiday" didn't actually weaken Social Security any, since the difference was made up with general fund revenues.

Younger generations always seem to be very skeptical about Social Security and tend not to believe it will be there for them. But it's weathered the past 70 years pretty well and there's no reason it shouldn't be around for another 70, if we as a country decide to keep it. While much is made of the long-term fiscal imbalance of SocSec, it's actually a relatively minor issue; with relatively small tweaks one could put it back in balance for the foreseeable future.

Meanwhile, Social Security has been wildly successful at reducing the poverty rate among the elderly. That age group went from having the highest poverty rate in America to the lowest poverty rate. That's no small accomplishment.
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Re: Taxes and fiscal cliff

Postby wack wack » Wed Jan 02, 2013 1:01 pm

kurt_w wrote:Younger generations always seem to be very skeptical about Social Security and tend not to believe it will be there for them.


Sadly, at least among the younger people I know, this is almost exclusively due to fear-mongering, not any sort of understanding of the issue.
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Re: Taxes and fiscal cliff

Postby jjoyce » Wed Jan 02, 2013 1:26 pm

And I'm sure Social Security played a role in that, but so did civil service protections, the GI Bill and the pensions that went along with economic prosperity after WWII.

Count me among the skeptical who don't think SS will amount to anything when I ultimately retire at 78 or whenever. It has nothing to do with fear mongering but an understanding of the massive number of people retiring over the next several years.

My payroll tax increase will directly affect my spending power and ability to save for stuff like college education, home improvements, vacation, etc. That 2% increase comes out of the disposable income bucket for middle income families with kids and out of the essentials bucket for low income families.
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