Skip to main content

View Diary: Public ready to blame Republicans if fiscal cliff talks fail (132 comments)

Comment Preferences

  •  The withholding may go up, but the taxes (12+ / 0-)

    won't be paid until April, 2014. So there's plenty of time to fix it. Call your congresscritters (202) 224-1213, and let them know how you want them to vote. Don't leave the President hanging out there alone. Our calls we signal to him that we have his back.

    •  The economic impacts are instant though (2+ / 0-)
      Recommended by:
      HappyinNM, Shirl In Idaho

      that increased withholding/expiring unemployment benefits/etc will immediately impact the economy.  Now, an argument can be made that going over the cliff and staying over it is dollar bullish, which should lead to lower oil prices and an offset through lower gas prices, but that would be predicated on us abandoning the deal talks.

      •  But not instantly catastrophic. (7+ / 0-)

        There would be an economic impact, but the nasty numbers from the CBO are predicated on the sequester remaining in effect for the entire year.

        Code Monkey like freedom / Code Monkey like peace and justice too
        Code Monkey very nerdy man / With big warm fuzzy bleeding heart
        Code Monkey like you!

        Formerly known as Jyrinx.

        by Code Monkey on Tue Nov 13, 2012 at 12:21:39 PM PST

        [ Parent ]

        •  But they will start in December (0+ / 0-)

          as soon as it's clear there won't be a deal.  The layoffs and the slowdown in growth will start then.  (Imagine what the Christmas season will be like for retailers once it gets out that a middle class family of four with household (two incomes) totaling $75,000 could owe the IRS an additional $4000 or so this coming April because of the AMT:

          According to estimates by the Tax Policy Center, more than half of all married couples will owe an additional tax of around $4,000 unless Congress acts. And more than a third of families with children will fall subject to the AMT, with parents of three or more children facing an extra tax of $4,700.

          Among married couples with at least two children and adjusted gross income between $75,000 and $100,000, the center estimates that 84 percent will face a significantly higher tax bill this year because of the AMT.  

          I don't know about you, but I'd put a married couple with two kids, each making $40 - $45,000 a year in the middle class, especially if they live in an urban area. And they will definitely feel that extra $4000 -- on top of the increase in withholding and the increase in payroll taxes.  
    •  Not entirely correct. (4+ / 0-)

      The AMT would kick in right away, for taxes filed in 2013.  It would cost a family of four about $4000 right away, in 2013.    See here.  That can't be fixed before April 15, according to the IRS.  

      Unlike most tax increases in the fiscal cliff, including the expiration of the George W. Bush-era income tax cuts, the AMT bill would come due almost immediately. And tax experts say it would be extremely disruptive to try to fix the AMT after the 2012 tax year closes Dec. 31.

      Officials with the Internal Revenue Service and the Treasury Department declined to comment on the impact of adjusting the AMT after December. But congressional tax aides said the IRS has advised Congress that trying to fix the AMT after the filing season begins in January would lead to processing delays of more than two months for nearly half of all returns — significantly postponing the delivery of refunds.

      “That would be a disaster, an unmitigated disaster for the taxpayers of the United States. It’s just not possible to do that,” said Nina Olson, national taxpayer advocate at the IRS. Olson noted that many people count on their ­refunds, which average around $3,000, to cover immediate needs. For example, she said, many utilities do not do shut-offs for nonpayment in January and February, because they know people will use their tax refunds to get caught up on their heating bills.

      And the layoffs aren't just going to be fixed immediately.  

      And if the country slides into recession, and unemployment spikes to 9%, that doesn't turn around on a dime, either.

      Once you get past January 1, and everything kicks in, it's not all that easy to reverse, even if you could get the Republicans to cave in within a few weeks (and even if they agreed to the $800 billion in revenue as Boehner apparently did in 2011 --  which is the amount, over 10 years, of expiration of Bush Tax Cuts on incomes over $250,000 -- there's no way they'd do that without very signficiant spending cuts of the kind the White House offered in 2011.)

      •  It would affect SOME families of four (4+ / 0-)

        Reading that article, it says a family of four earning over 75,000.  Median household income in America is roughly 50k - so the AMT patch not being fixed wouldn't affect the bottom half of the country at all.  

        But you can rest assured we'll get plenty of spin about these poor hard working families who just need tax relief, and to pay for it, we're going to cut Medicaid, Medicare, Social Security, food stamps - you know, things that help the poor.  

        •  Really? Two incomes totaling $75,000? (1+ / 0-)
          Recommended by:
          VClib

          You think it's no big deal for them to pay an extra $4000 in income taxes this April PLUS have withholding go up and payroll deductions go up starting January 1?  Do you really want to be the party that tells these kinds of people that they are now part of the "rich" so they shouldn't complain about the extra tax money?

          The reason that "the bottom half" won't be affected by the AMT is because most in the bottom half don't pay federal income taxes.  But many of them do get the Earned Income Tax Credit, and that goes down as well.  

          I think that a married couple with two kids, each earning say $40,000 IS middle class.  If the Democratic Party wants to tell every two income household with total income over $75,0000 that they are "rich" and should have no problem paying thousands in additional income taxes, well, you've lost a huge chunk of the country.  

          And the AMT is going to hit the vast majority of working couples who each earn $40,000 - $50,000 this spring:  

          According to estimates by the Tax Policy Center, more than half of all married couples will owe an additional tax of around $4,000 unless Congress acts. And more than a third of families with children will fall subject to the AMT, with parents of three or more children facing an extra tax of $4,700.

          Among married couples with at least two children and adjusted gross income between $75,000 and $100,000, the center estimates that 84 percent will face a significantly higher tax bill this year because of the AMT.

          These are working families trying to raise children, save for college, and put away a little for their own retirement.  No, they are not poor.  But I don't think the Democratic Party wants to tell a married couple each making $40,000 a year that they are rich enough so that an extra $4000 in four months -- plus significantly reduced take-home pay starting January 1 -- is no big deal.  
          •  You are spreading fud at this point (1+ / 0-)
            Recommended by:
            Womantrust

            Do some research.  

            I have no idea where that 4000 number came from, after extensive looking.  My guess is that's the average cost of the AMT not being patched divided by the number of married joint filers in that bracket.  It's not in the Tax Policy Center study, that I can find.  You tell me if you can find it http://www.taxpolicycenter.org/...

            The Tax Policy Center, who's relied upon for that study, certainly does not make that claim.  They point out that there are a lot of factors in how much it would affect you - are you in a high tax or low tax state, how many deductions and exemptions(including for children) you take, etc.  By their estimates half of joint filers in the 75-100k range would not be affected by the lack of a patch at all.

            In other words, couples who make from 75k to six figures ARE NOT going to each face a 4000 hike in taxes.  About half of the couples who make six figures may face a raise in their effective tax rate, which depends in large part upon where they live and how many kids they have.  A fraction of folks in the top 20% of household income can manage a change in their discretionary income.  I refuse to let this false crisis act as cover for cutting programs for the poor and retired.
             

            •  That was harsher than I meant (0+ / 0-)

              To be - I don't believe you're deliberately spreading misinformation, and I'd like to apologize for that.

              I just don't like seeing these memes spread and take a life of their own.  

            •  You are looking at the wrong TPC study (1+ / 0-)
              Recommended by:
              VClib

              The one involving the fiscal cliff, that prompted the news reports last month, is here.

              From the study:

              Upper middle-income households would be particularly affected by the expiration of the
              AMT patch.
              Finally,  the AMT “patch” that protects tens of millions of taxpayers from additional taxes expired at the end of 2011. Unless Congress extends the patch retroactively,
              many taxpayers will owe AMT on their 2012 tax returns (the tax returns that people will file in early 2013).                                                
              Temporary Increase in AMT Exemption. The AMT operates parallel to the regular tax and sets a
              floor on total tax liability. Taxpayers whose income exceeds the AMT exemption must calculate
              both regular tax and AMT liabilities and pay the larger amount. 6  EGTRRA temporarily increased
              the AMT exemption to preclude the alternative levy’s reducing the impact of other tax cuts in the
              legislation. Since then, Congress has repeatedly “patched” the AMT by setting higher exemptions but only for a year or two at a time. The most recent patch, enacted in 2010, covered  tax years 2010 and 2011 and raised the 2011 exemption from $45,000 to $74,450 for couples and  from $33,750 to $48,450 for others. If Congress does not enact another patch and extend it
              retroactively to the current year, the AMT will hit tens of millions more taxpayers, boosting their
              2012 tax liability substantially.
              And there are charts showing the additional liabilities for various kinds of taxes at different levels.
              •  Thanks for the link (0+ / 0-)

                Apologies again for being rude.  

                From your link, Table 6 shows the change in average tax liability by quintile.  For the top 20% quintile, which starts at 88k for married filing jointly, the average AMT change is only 1,265.  So I am still inclined to believe the 3700 number is based on misreporting from the Tax Policy Center.

          •  It's telling about our stagnant incomes (1+ / 0-)
            Recommended by:
            VClib

            that a two-earner family making $75,000 is in fact doing much better than the median family.  And for two earners, $75K total wages is far, far from a lavish lifestyle.

      •  That missed $800 Billion deal still bothers me.. (0+ / 0-)

        I am afraid the President will try to reach too far again and miss the chance for some deal.

    •  It also signals the republicans the President got (0+ / 0-)

      political capital in this election and guess what we are it. He needs to be able to spend us liberally supporting him and hammering the republicans. If we can't do this for him now, there will be no new new deal and the Republicans will have functionally won. Jeez I hate sounding like Ann Coulter, UGH!

      The work goes on, the cause endures, the hope still lives and the dreams shall never die. ~ Edward M. (Ted) Kennedy

      by cherie clark on Tue Nov 13, 2012 at 01:11:58 PM PST

      [ Parent ]

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site