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    How the Fiscal Cliff May Affect Your Taxes

    By Kay Bell | Bankrate.com – Fri, Nov 16, 2012 4:31 PM EST

    In a few weeks, tax laws U.S. taxpayers have enjoyed for more than a decade are scheduled to expire. Along with long-standing and historically low tax rates, several popular tax credits and deductions already have or will soon expire.

    That scenario is being described as a fiscal cliff. And if American taxpayers are nudged over that cliff by Congressional inaction, most of them will face dramatically higher tax bills.

    Estimates by tax policy groups and government accountants put the total tax cost at more than $500 billion in 2013.

    That averages out to almost $3,500 per household, according to calculations by the Tax Policy Center. Middle-class taxpayers are likely to see an average increase of almost $2,000.

    Using Tax Policy Center data and hypothetical taxpayers, Bankrate shows what some tax bills might look like if lawmakers don't soon put up a guardrail at the fiscal cliff's edge.

    The single tax filer

    Joe is single and has an adjusted gross income of $60,000 a year. As is the case among two-thirds of the tax-paying population, Joe claims the standard deduction.

    After subtracting the projected 2013 personal exemption of $3,850 and standard deduction of $6,050 for a single taxpayer, Joe's taxable income comes to $50,100.

    If the current tax laws are extended beyond 2012, that would mean $8,900 of Joe's income would be taxed at only 10 percent, and his top tax rate would be 25 percent. This would leave him with a tax liability of $8,465.

    If the current rates expire, however, Joe's tax bill would be $863.50 higher.

    The reason? There would no longer be a 10 percent rate, making more of Joe's earnings taxed at 15 percent, and his top tax rate would be 28 percent instead of 25 percent.

    Married couple filing jointly

    Jane and Bill have two kids: 10-year-old Jimmy and 8-year-old Sarah. Both parents work, bringing home a combined adjusted gross income of $175,000. They don't yet own a home, so without mortgage interest to deduct, they're still claiming the standard deduction.

    If the current tax laws stay in place, their four personal exemptions totaling $15,400 plus the $12,100 standard deduction will get them to $147,500 in taxable income, resulting in a tax liability of $28,803.

    But Jane and Bill wouldn't have to send the Internal Revenue Service that much. Thanks to the $1,000 per-child tax credit, their final tax bill would be $26,803.

    If the tax laws expire, however, Jane and Bill's tax bill will go up by $6,304 to $33,107. That takes into account that the child tax credit would return to its pre-tax-cut level of just $500 per kid.

    One reason for the increased tax bill is the return of the marriage tax penalty. This is where a couple pays more taxes by filing one joint return than they would if they filed two returns as single taxpayers. Wider tax brackets and a larger standard deduction for married couples now help ease the penalty.

    Instead of facing a top tax rate of 28 percent, Jane and Bill would be in the 31 percent tax bracket if the tax cuts expire.

    Single parent head of household

    Kathryn is a divorced working mom of 7-year-old Jonah. She makes $75,000 a year via her salary and alimony payments.

    By filing as head of household, Kathryn's standard deduction of $8,900 and personal exemptions totaling $7,700 for herself and her son get her to $58,400 in taxable income.

    Taxes on that amount are currently collected at the 10 percent, 15 percent and 25 percent rates, giving Kathryn a tax bill of $9,125. She knocks $1,000 off that thanks to the child tax credit.

    But if the tax cuts expire, Kathryn's tax liability will be $1,435 more -- $9,560 -- in 2013. The bigger bill comes from losing the expired 10 percent and 25 percent tax rates, putting more of her income into the 15 percent and 28 percent tax brackets.

    And just like all parents, married or single, Kathryn will only get a $500 child tax credit for her son starting in 2013.

    Expiration of capital gains rates

    If any of our hypothetical 2013 taxpayers have investments in a taxable brokerage account, their tax bills next year will be higher.

    Long-term capital gains and certain dividend payments are taxed at lower rates than the regular, ordinary income rates, which now top out at 35 percent. Most taxpayers pay capital gains taxes at the 15 percent rate. Taxpayers in the 10 percent and 15 percent brackets don't owe any taxes on their gains.

    But if today 's lower rates expire, the capital gains rates will go to 20 percent for most investors and 10 percent for those in the 15 percent tax bracket.

    And dividends will lose their favorable tax treatment entirely. These payments will return to being taxed as ordinary income, meaning that taxpayers making enough to put them into the highest income tax bracket in 2013 would pay taxes on dividends at the top 39.6 percent income tax rate.

    In addition, a provision in the health care reform law, often referred to as Obamacare, will kick in next year. This new 3.8 percent surtax will apply to capital gains, dividend and interest income of more than $250,000 for married couples filing jointly or $200,000 for other taxpayers.

    Payroll tax holiday over

    Every person who collects a paycheck knows that taxes reduce take-home pay.

    In addition to income taxes, both federal and where applicable state, payments toward Social Security and Medicare, known as FICA taxes, are collected via withholding.

    So that workers would have more money to spend and give the economy a boost, Congress enacted a 2 percent cut in the Social Security taxes paid by workers. This so-called payroll tax holiday has been in effect since 2011 but is scheduled to expire Jan. 1, 2013.

    That means every worker will pay more taxes in 2013. The increase could be substantial for high-income earners.

    Individuals who make up to the Social Security wage base of $113,700 next year will pay $7,049.40 in taxes for the retirement system. That's $2,425 more than this year because the wage base was slightly smaller ($110,100), and workers paid just 4.2 percent of their income toward Social Security instead of the regular 6.2 percent level that returns in 2013.

    Other expiring tax breaks

    While the possibility of higher tax rates gets most of the attention as taxpayers near the fiscal cliff, many other provisions could cause higher taxes if they are allowed to end Jan. 1, 2013.

    In addition to losing half of the current child tax credit, parents would get reduced savings from the child care tax credit.

    Students looking for the $2,500 American opportunity education tax credit would find instead its predecessor the Hope credit, which maxes out at $1,800.

    Lower paid workers could still claim the earned income tax credit, but eligibility requirements would be tougher and credit amounts lower.

    The estate tax would apply to more property left at death, affecting estates worth more than $1 million instead of the current $5.12 million exclusion amount. The tax rate also would rise from the current 35 percent to 55 percent.

    Higher-income taxpayers who itemize would again see their overall Schedule A claims reduced by 3 percent. A similar reduction also would apply to personal exemption amounts for wealthier filers.

    And legislation to increase the alternative minimum tax income exclusion amount must be approved retroactively for 2012 as well as for 2013, or tens of millions more taxpayers will face higher tax bills because of this parallel tax.

    http://finance.yahoo.com/news/how-th...our-taxes.html
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    Year-end tax planning for the fiscal cliffhanger
    By Bill Bischoff | MarketWatch – Fri, Nov 16, 2012 2:03 PM EST

    To do year-end tax planning right, you should take a two-year perspective. You don’t want to make a move that lowers your 2012 tax bill but raises your 2013 tax bill by more. But right now, taking a two-year perspective is difficult (to put it kindly), because we don’t yet know what the 2013 federal income tax landscape will look like. (See Key tax issues to watch post-election and 14 tax issues to watch after the election.)

    Unfortunately, it could be mid-December or even later before the picture is revealed. Nevertheless, this article supplies some year-end tax-planning suggestions for moderate-income folks. If you’re in that category, I think it’s a good bet that the existing tax brackets for ordinary income (from salaries, self-employment income, interest, short-term capital gains and so forth) will be extended through 2013 for singles with income under $200,000 and for married couples with income under $250,000. That would mean no tax rate changes for you. I’m less optimistic that the existing favorable rates on long-term capital gains and dividends will be extended through 2013 for moderate-income taxpayers, but it’s still a reasonable possibility.

    With those thoughts in mind, here are my best guesses about some tax-smart moves to make (or not make) between now and year-end.

    Leverage the Standard Deduction : Are your 2012 itemized deductions likely to wind up being just under, or just over, the standard deduction amount? If so, consider the strategy of bunching together expenditures for itemized-deduction items every other year, while claiming the standard deduction in the intervening years. I think this year is a good one to go with the standard deduction. Next year, when tax rates might be higher, you can claim itemized deductions.

    The 2012 standard deduction for married joint filers is $11,900. For single filers, it’s $5,950. For heads of households, it’s $8,700.

    For example, say you’re a joint filer whose only itemized deductions are about $4,000 of annual property taxes and about $8,000 of home mortgage interest. Go ahead and claim the $11,900 standard deduction on this year’s return. Next year, prepay your 2014 property taxes by Dec. 31, 2013, and claim $16,000 of itemized deductions on your 2013 return: $4,000 of 2013 property taxes, plus another $4,000 for the 2014 property tax bill, plus $8,000 of mortgage interest. The $16,000 of itemized deductions will probably exceed the 2013 standard deduction amount by at least $3,500. Following this strategy will cut your taxable income by a meaningful amount over the two-year period. Other deductible items that you can bunch together every other year include the interest due with your January home mortgage payment, state income tax payments and charitable donations.

    If You Are Clearly in the Itemizing Mode: Be Ready to Prepay Deductible Items (But Don’t Do It Yet) : Accelerating deductible expenditures into this year to produce higher 2012 write-offs makes sense if you expect to be in the same or a lower tax bracket next year. At this point, we don’t know what the 2013 tax brackets will be. So be ready to prepay deductible expenditures before year-end, but don’t actually do it yet. If it becomes clear you’ll face higher tax rates in 2013, you might want to defer those expenditures into next year, when the resulting deductions will deliver bigger tax savings. Here are some items you easily pay either this year or next, depending on what happens with next year’s tax rates.

    State and local income and property taxes due early next year. But forget about doing the prepayment drill if you know you’ll owe the alternative minimum tax (AMT) for 2012. Write-offs for state and local income and property taxes are completely disallowed under the AMT rules. Therefore, prepaying those taxes will do little or no good if you’re an AMT victim.

    Accelerate Medical Expenditures Into This Year (Almost a No-Brainer for Non-Seniors) : For many years, the itemized deduction for uninsured medical expenses paid for you, your spouse and your dependents equaled the excess of qualified expenses over 7.5% of adjusted gross income (AGI is the amount on the last line of page 1 of your Form 1040). The 7.5%-of-AGI threshold still applies for 2012. Next year, the threshold rises to 10% of AGI for most folks, thanks to the Obmamacare legislation. However, if either you or your spouse will be 65 or older as of Dec. 31, 2013, the 10%-of-AGI threshold will not take effect until 2017. If you will be affected by the new 10%-of-AGI threshold, consider accelerating medical expenses into 2012. That way, you can take advantage of this year’s more taxpayer-friendly 7.5%-of-AGI threshold.

    Be Ready to Prepay College Tuition : If your 2012 AGI allows you to qualify for the American Opportunity or Lifetime Learning higher-education tax credits, consider prepaying tuition bills that are not due until early 2013 if that would result in a bigger credit on this year’s Form 1040. Specifically, you can claim a 2012 credit based on prepaying tuition for academic periods that begin in January through March of next year.

    The College Tax Breaks Explained. : If your 2012 AGI is too high to be eligible for the Lifetime Learning credit, you might still qualify to deduct up to $2,000 or $4,000 of college tuition costs. If so, be ready to prepay some tuition bills that are not due until early 2013. But don’t do it yet, because the college tuition deduction expired at the end of 2011. I expect it to be restored for 2012, but it hasn’t happened yet. If the deduction is restored, prepaying tuition for academic periods that begin in January through March of next year could give you a bigger write-off on this year’s return.

    Take Advantage of 0% Rate on Long-Term Gains : For 2012, the federal income tax rate on long-term capital gains is 0% when they fall within the 10% or 15% federal income tax rate brackets. If all the Bush tax cuts are allowed to expire at year-end, the minimum tax rate on 2013 long-term gains will be 10% (or 8% for gains from certain investments held for over five years). So consider selling winner investments held in your taxable brokerage firm account this year to take advantage of the 0% rate. That said, you should only sell winners that you are thinking about unloading anyway. Don’t let the tax tail wag the dog.

    http://finance.yahoo.com/news/end-ta...133023711.html
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    6 Ways the Fiscal Cliff Could Affect Seniors
    By Tom Sightings | U.S.News & World Report LP – Tue, Nov 13, 2012 12:49 PM EST

    The "fiscal cliff" is on the horizon. The term is shorthand for a series of federal spending cuts and tax hikes that will automatically go into effect in January 2013, if Congress doesn't act to override them. These automatic measures originated in Congress last year as part of a compromise to pass the Budget Control Act of 2011.

    The tax hikes include ending the temporary reduction in the payroll tax (which funds Social Security), ending some tax breaks for businesses, changing the alternative minimum tax, and inaugurating some taxes to start paying for the Affordable Care Act. They will also affect certain tax credits for college tuition and low-income families.

    At the same time, the White House has detailed a whole list of budget cuts that will affect over 1,000 government programs, including $55 billion in defense cuts and $11 billion in lower Medicare payments.

    The fiscal cliff presents a giant air pocket for the entire economy. But here are six ways these tax hikes and budget cuts could affect the nation's seniors in particular:

    1. Increase taxes on your dividends. Income that retired people receive from their stock and mutual fund investments is currently taxed at a maximum rate of 15 percent. If we go over the fiscal cliff, dividends will be taxed at ordinary income rates, up to 40 percent. According to investment firm Goldman Sachs, companies in the S&P 500 index on average pay a dividend yield of 2.1 percent before tax. With the current tax rate of 15 percent, the yield declines to about 1.8 percent. After the fiscal cliff the average dividend yield would fall to an almost-insignificant 1.2 percent.

    2. Increase taxes on capital gains. The maximum tax rate on long-term capital gains (investments held longer than a year) will increase from 15 percent to 20 percent. So, for example, if you bought AT&T ten years ago, you likely paid about $27 a share. Today, those shares are priced at about $33, for a little over a 20 percent gain. Sounds good, doesn't it? But in fact, that 20 percent gain just barely makes up for inflation. After you pay 20 percent of your gain in taxes, you've actually lost purchasing power.

    3. Social Security. Arguably, the fiscal cliff brings good news for Social Security. No, your benefit will not get any higher. But the fiscal cliff ends the 2 percent payroll tax "holiday" put in place by President Obama in 2010. Since the payroll tax funds Social Security, the higher tax will repair some of the damage done to the funding of the program.

    4. Cutbacks to Medicare. The fiscal cliff aims to cut some $11 billion out of Medicare, in part by lowering payments to doctors. This could mean that individual patients will have to pay the difference. Alternatively, it could put cost pressures on medical facilities, forcing them to reduce staff. Lower payments could also lead doctors to limit the number of Medicare patients they will see. The fiscal cliff could make it harder for some people to find a doctor, and could mean longer wait times and a lower quality of service for those who do.

    5. The value of your home. No one knows how the fiscal cliff will influence mortgage rates. But with less government spending, less employment, less after-tax income, and a less robust economy in general, it's hard to see home prices rebounding in any meaningful way. In fact, the fiscal cliff could rachet down the value of your house yet again, as funds are squeezed out of the housing market to shore up the rest of the economy.

    6. The value of your investments. In theory, the value of an investment consists of the after-tax sum of all future returns. If, as many experts predict, the economy suffers after going over the fiscal cliff, then those returns will be lower. To add insult to injury, the lower returns will be taxed at a higher rate. It only makes sense that the stock market, as well as private business investments, would settle to a lower level. High-dividend stocks, defense stocks, and banking stocks might be the biggest losers. But even more stable investments in health care, oil, and agriculture would probably be a bad bet, since going over the fiscal cliff will certainly leave everyone black and blue.

    http://finance.yahoo.com/news/6-ways...174914411.html

    What's in US fiscal cliff and who'd pay how much
    What is in the $670B US fiscal cliff and who would pay how much, at a glance
    By The Associated Press | Associated Press – Tue, Nov 13, 2012 10:22 AM EST


    American consumers and businesses will pay much higher taxes next year if a package of tax increases and spending cuts known as the "fiscal cliff" takes effect as scheduled Jan. 1.

    The nonpartisan Congressional Budget Office says the measures would push the economy into recession and drive the unemployment rate to 9.1 percent next year. The rate is now 7.9 percent.

    Below are the main elements. The estimated dollar figures are for calendar year 2013:
    http://finance.yahoo.com/news/whats-...080225278.html
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    3 Post-Election Tax Changes You Need to Know
    By Jason Hull | U.S.News & World Report LP – Fri, Nov 16, 2012 12:31 PM EST

    Now that the election is over, tax law changes are coming. It's important to prepare now for next year so you aren't surprised by what you owe (or the size of your refund) after end of 2013. Here's a look at what to watch:

    Increases in the capital gains tax rate. The capital gains tax rate is increasing from 15 percent to 20 percent, and for lower-income households, it's going from zero percent to 10 percent. In a normal year, tax strategists talk about capital loss harvesting. However, with a pending rise in the tax rate, Michael Kitces, partner at the Pinnacle Advisory Group, a Columbia, Maryland, private wealth management firm, recommends investigating selling investments held in taxable accounts that have experienced sizeable gains. Because there is no wash rule for capital gains, you could immediately repurchase the same investment and readjust your basis, locking in the capital gain this year while tax rates are still lower. Higher income earners should pay special attention.

    According to Kitces: "For higher income individuals, the capital gains rate rises not just to 20%, but to 23.8%, thanks to the new Medicare tax on unearned income, which just increases the imperative for harvesting capital gains. Alternatively, this also means that even if you think Congress will intervene to prevent the fiscal cliff, capital gains harvesting is still relevant for higher income clients to avoid the Medicare surtax next year. It's also generally still relevant for a lot of lower income individuals as well, as even if the rates are extended, it's hard to do harm by harvesting gains at 0% (especially if you're in a state with no state income tax liability either)."

    Increases in the dividend rate. Qualified dividends will be taxed at the individual's income tax rate rather than at the previous 15 percent dividend tax rate. You can expect many companies to issue special dividends in 2012 rather than 2013 to allow their shareholders (oftentimes employees of the companies themselves) to benefit from what is usually a lower tax rate than they will face in the future. If you're a lower-income household, it might be worth investigating putting dividend-paying funds into your taxable accounts since you might wind up with a lower tax rate than before if your marginal tax rate is already below 15 percent.

    If you're in a higher income household, you may want to look at moving your long-term, dividend-paying and interest-generating investments into retirement accounts and replacing them in your taxable accounts with growth-oriented investments.

    Higher personal income tax rates. The highest personal income tax rate increases from 35 percent to 39.6 percent, and, additionally, there is a 3.8 percent Medicare surtax on unearned income above $250,000 for married filing jointly households and $200,000 for single filers. Depending on how the extension of the Bush tax cuts plays out, if you have to choose between contributing to an IRA in 2012 or in 2013 (ideally you contribute in both years, but sometimes it just doesn't work out that way), you may want to consider one of these strategies:

    --If your income tax rate will rise and you qualify for a Roth IRA: Contribute in 2012, since Roth IRA contributions are made with after-tax money.

    --If your income tax rate will rise and you do not qualify for a Roth IRA and can deduct IRA contributions: Contribute in 2013, since these contributions can reduce your adjusted gross income (AGI), and you're reducing the amount of tax you have to pay in a higher tax year.

    The good thing about deciding what to do with your IRA is that you don't have to make the decision this year. You can fund your 2012 IRAs up until the April tax filing deadline in 2013, meaning you have some time to see how the "fiscal cliff" negotiations play out and what the new Congress does before making your decisions.

    As always, there are many other considerations to take into account when planning your investing strategies to account for changing tax laws, so it may be wise to seek the advice of a financial planner or CPA before making these moves.

    http://finance.yahoo.com/news/3-post...173134149.html

    Wealthy Dump Assets in Advance of Cliff
    By Robert Frank | CNBC – Mon, Nov 12, 2012 4:00 PM EST

    For many of the wealthy, 2012 is becoming a good year to sell.

    Fearing an increase in capital gains and dividend taxes, many of the rich are unloading stocks, businesses and homes before the end of the year.

    Wealth advisers say that with capital-gains taxes potentially going to 25 percent from 15 percent, and other possible increases in the dividend tax, estate tax and other taxes, many clients are selling now to save millions in taxes. "Under almost any scenario, it makes sense to take the gains this year," said Gregory Curtis, chairman and managing director of Greycourt & Co. "Clients aren't selling willy nilly. But if they can and they have a huge gain, they're selling now."

    If the Bush-era tax cuts expire, taxes on capital gains would revert back to its previous rate of 20 percent from its current 15 percent. Another 5 percent may be added from health-care levies and changes in itemized deductions, bringing the rate to 25 percent for many high earners.

    Taxes on dividends could go from 15 percent to over 43 percent. And the estate tax could go from 35 percent on estates worth more than $5 million to 55 percent on estates over $1 million.

    As a result, the wealthy are taking a close look at all of their assets to see what could or should be sold off now to avoid potentially higher taxes next year.

    The most noticeable sell-off has been in stocks. Wealth managers many of their clients who have large gains on stocks are selling them now, or selling them or buying them back again to create a higher basis (and thus a lower tax bill later).

    Since the wealthiest one percent of U.S. households control more than half of the stocks in the United States, their selling and buying can have strong ripple effects on the market.

    Bankers say owners of private businesses are also pressing to sell their companies to ahead of a possible tax hike. If an entrepreneur, for instance, sells a company for $100 million, they could pay $10 million less in taxes than if they sold in 2013.

    Deal advisors say that by selling his company to Disney this year for $4 billion, George Lucas potentially saved hundreds of millions of dollars in taxes.

    Granted, business owners aren't suddenly selling their companies after the election. The businesses most likely to take advantage of lower taxes are small businesses that may have been in the process of selling and can push to close before Jan. 1. "Selling a business is not easy, it's not like you can just pull a switch," said Frederic Seegal, vice chairman of Peter J. Solomon Co, the investment banking firm.

    Mansion sales are seeing a similar acceleration, brokers say. Some recent multi-million-dollar sales in Florida, New York and California were partly driven by sellers who were anxious to sell before the end of 2012, brokers say. The sell off could have profound impacts on both asset prices in the United States, as well as tax revenues.

    Roberton Williams of the Tax Policy Center said the direct impact of all this front-loading is hard to determine, since there are so many other factors in the economy. But he said that a rise in wealthy sellers could put pressure on asset prices and stocks, at least in the short term. "This could depress asset values," he said.

    He also said that all this income-shifting could make revenues more volatile and unpredictable. It might also result in the government raising less than expected during the first year or two of the tax increase. "The government may come out ahead this year, but lower the next year."

    In 1986, for example, the capital gains tax rate was 20 percent but was schedule to go up to 28 percent in 1987 as part of President Ronald Reagan's tax overhaul. In 1986, capital gains collections soared to $52 billion - twice the amount as 1985. But the following year, when the higher rate kicked in, capital gains fell by 50 percent.

    http://finance.yahoo.com/news/wealth...210032429.html
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    Hating Grover
    Norquist should wear the elite obloquy as a badge of honor.

    By Rich Lowry ~ November 27, 2012 12:00 A.M.


    Listening to Democrats and the media, you could be forgiven for thinking the point of a deal over the looming “fiscal cliff” wouldn’t be to reduce the deficit so much as to reduce the influence of one man, Grover Norquist of Americans for Tax Reform.

    Known to one and all simply as Grover, he is the keeper of the Taxpayer Protection Pledge signed by almost all Republicans committing themselves not to raise taxes. For this offense, Grover is deemed the enemy of all that is right and just.

    The pollster and ABC News commentator Matthew Dowd said on This Week that “Grover Norquist is an impediment to good governing. The only good thing about Grover Norquist is that he was named after a character from Sesame Street.” Not everyone has been as juvenile as Dowd, but he captured the gleeful spirit of the anti-Norquist pile-on.

    The idea that we’d have “good governing” only if more tax increases were thrown on top of poorly designed, out-of-control entitlements, wasteful subsidies, rotten schools, and an ever-growing mess of regulation is fanciful. Obamacare increased taxes by more than $500 billion, and our governing did not noticeably become better as a result.Grover has three insights that are absolutely correct: 1) Revenues from tax increases will almost invariably be spent. Does anyone believe that if George W. Bush had not cut taxes early in his first term that the Tom DeLay and Nancy Pelosi Congresses wouldn’t have, in their collective wisdom, found ways to spend the additional revenues? 2) The typical structure of the Washington budget deal is tax increases now in exchange for promised spending cuts over time that don’t materialize. 3) The Republican brand is dependent on its status as the anti-tax party.

    These aren’t alien beliefs foisted on the Republican party, but represent GOP orthodoxy. Nonetheless, everyone acts as if Grover is the instrument of the party’s Babylonian captivity. If only the dastardly Norquist didn’t make Republicans say they won’t raise taxes — and put it in writing — the party could fulfill its role in the “good governing” of Washington, namely joining Democrats to raise taxes.

    The proof of the supposed perversity of Grover’s influence is the widely cited hypothetical example of a Democratic offer to cut $10 in spending for every $1 in new tax dollars. In one presidential-primary debate, every Republican candidate indicated that he or she would oppose such a deal. Of course, it’s all academic because such a deal will never, ever be on offer. Hypotheticals work both ways, or they should. What would Democrats be willing to accept in exchange for signing off on a premium-support plan for Medicare? Nothing.

    The press isn’t scandalized by this particular intransigence. It isn’t a favorite topic on the Sunday shows whether the influence of AFL-CIO president Richard Trumka, who opposes all meaningful spending cuts, will be broken in the Democratic party. No one is outraged that the Left is mustering a lobbying campaign to keep President Barack Obama from giving anything on entitlements in the talks over the fiscal cliff.

    But whenever a Republican says he won’t abide by Grover’s pledge, the media act like a choir of angels celebrating another saved soul. So far, it’s only the usual suspects in the party, although House Speaker John Boehner has signaled a willingness to raise more revenue if the president will cut entitlement spending. What makes this time different from prior budget showdowns is that Republicans can remain technically compliant with the pledge by doing nothing, and taxes would still go up on everyone automatically at the end of the year.

    A deal, then, could make sense, depending on the parameters. As the cliff approaches, all the pressure within Washington and within the media will be for Republicans simply to cave to the president. Grover will make it as painful as possible for them to do it, and should wear the resulting elite obloquy as a badge of honor.

    http://www.nationalreview.com/articl...er-rich-lowry#
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    Tuesday, November 27, 2012
    We can't tax our way out of our fiscal problems

    Maybe if we had an accurate accounting of the actual liabilities that our federal government faces, http://online.wsj.com/article/SB1000...ditorialPage_h people would be a lot more concerned about fixing our fiscal problems. But we don't see reported the liabilities we face in Medicare, Social Security, and pensions for federal employees. Right now we are on the hook for $86.8 trillion for those expenses, yet they're not included in projections of our national debt. Two prominent former House members, Chris Cox and Bill Archer, report the stark truth that there is no way to tax our way out of this debt.

    When the accrued expenses of the government's entitlement programs are counted, it becomes clear that to collect enough tax revenue just to avoid going deeper into debt would require over $8 trillion in tax collections annually. That is the total of the average annual accrued liabilities of just the two largest entitlement programs, plus the annual cash deficit.

    Nothing like that $8 trillion amount is available for the IRS to target. According to the most recent tax data, all individuals filing tax returns in America and earning more than $66,193 per year have a total adjusted gross income of $5.1 trillion. In 2006, when corporate taxable income peaked before the recession, all corporations in the U.S. had total income for tax purposes of $1.6 trillion. That comes to $6.7 trillion available to tax from these individuals and corporations under existing tax laws.

    In short, if the government confiscated the entire adjusted gross income of these American taxpayers, plus all of the corporate taxable income in the year before the recession, it wouldn't be nearly enough to fund the over $8 trillion per year in the growth of U.S. liabilities. Some public officials and pundits claim we can dig our way out through tax increases on upper-income earners, or even all taxpayers. In reality, that would amount to bailing out the Pacific Ocean with a teaspoon. Only by addressing these unsustainable spending commitments can the nation's debt and deficit problems be solved.
    This is scary stuff. No wonder that so few politicians want to talk about these stark facts. But unless we address the root causes of our fiscal crises instead of relying on short-term band-aids, we'll never come close to fixing our problems.

    We can't even get an honest discussion of how big the problem is.

    http://betsyspage.blogspot.com/2012/...ur-fiscal.html

    comments

    All the Democrats are saying we can tax our way out of fiscal problems. Obama feels that if the "rich" pay there fair share all our fiscal issues will go away. The only cuts that he has discussed have been to defense (about the only part of Gov't that works). So you, as you consistently have been, are the one who is being dishonest. You and the rest of the Lib/Prog's need to grow up...

    ..

    Promises that can't be kept, won't be kept. Obligations that can't be honored, won't be honored. Debt that can't be repaid, won't be repaid. The crash is inevitable. And the more we borrow to put it off, the harder that crash will be, and the longer the recovery.

    Be prepared.
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    Surf’s up! Obamas taking $4 million Hawaiian vacation as America plunges over fiscal cliff
    Posted at 12:18 pm on November 29, 2012 by Twitchy Staff


    :

    Ana Nguyen@anananguyen

    Our country is on the verge of going over a #fiscalcliff & Obama is planning a 20-day vacation! #Leadership

    29 Nov 12
    As Twitchy reported earlier, despite the fast-approaching fiscal cliff, President Obama can’t be troubled to meet with Congressional leaders. http://twitchy.com/2012/11/29/priori...s-for-13-days/ Well, it looks like the country will have to wait a little longer for even a halfhearted show of leadership. While the president is threatening Americans that Republicans will steal their $2000, http://twitchy.com/2012/11/28/hijack...hashtag-fails/ he’s preparing to embark on a three-week, $4 million Hawaiian vacation. Funded by taxpayers, of course. http://www.whitehousedossier.com/201...-hawaii-cliff/

    The Hawaii Reporter estimates that the total cost of the vacation to Hawaii and federal taxpayers, including funding for travel, staff and protection, is at least $4 million. Obama’s vacations are more expensive than those of previous presidents because of the huge costs to fly Air Force One and an accompanying cargo plane for nine hours or so to Hawaii.
    The trip is set for December 17 to January 6. We’re set to reach the edge of the fiscal cliff on January 2. As Obama and the Democrats’ irresponsible policies send us hurtling toward economic disaster, the president and his family will be enjoying their pu pu platters. Maybe they’ll even do a little cliff diving of their own! http://www.youtube.com/watch?v=WSnvjeCzIEE

    Conservatives are absolutely livid:


    Sadly - I can not share that portion with you - because certain words are CENSORED No idea WHAT WORDS nor WHY they are considered CENSORED as no one can or will tell the tale.
    http://twitchy.com/2012/11/29/surfs-...-fiscal-cliff/

    But somehow Romney was "out of touch"?
    Laissez les bon temps rouler! Going to church doesn't make you a Christian any more than standing in a garage makes you a car.** a 4 day work week & sex slaves ~ I say Tyt for PRESIDENT! Not to be taken internally, literally or seriously ....Suki ebaynni IS THAT BETTER ?

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    Obama’s “fiscal cliff” offer to Republicans calls for $1.6 trillion in new taxes and end of debt ceiling in exchange for … nothing, basically; Update: McConnell laughed out loud; Update: Walk away, says Krauthammer
    posted at 6:02 pm on November 29, 2012 by Allahpundit

    Even more unbelievable than the “offer” itself is the fact that the our hack media will go on painting Republicans as the unreasonable ideologues in this equation. http://www.nytimes.com/2012/11/30/us...gewanted=print

    House Republicans said on Thursday that Treasury Secretary Timothy F. Geithner presented the House speaker, John A. Boehner, a detailed proposal to avert the year-end fiscal crisis with $1.6 trillion in tax increases over 10 years, an immediate new round of stimulus spending, home mortgage refinancing and a permanent end to Congressional control over statutory borrowing limits.

    The proposal, loaded with Democratic priorities and short on detailed spending cuts, was likely to meet strong Republican resistance. In exchange for locking in the $1.6 trillion in added revenues, President Obama embraced $400 billion in savings from Medicare and other entitlements, to be worked out next year, with no guarantees.

    He did propose some upfront cuts in programs like farm price supports, but did not specify an amount or any details. And senior Republican aides familiar with the offer said those initial spending cuts might well be outnumbered by upfront spending increases, including at least $50 billion in infrastructure spending, mortgage relief, an extension of unemployment insurance and a deferral of automatic cuts to physician reimbursements under Medicare…

    [T]he details show how far the president is ready to push House Republicans. The upfront tax increases in the proposal go beyond what Senate Democrats were able to pass earlier this year. Tax rates would go up for higher-income earners, as in the Senate bill, but Mr. Obama wants their dividends to be taxed as ordinary income, something the Senate did not approve. He also wants the estate tax to be levied at 45 percent on inheritances over $3.5 million, a step several Democratic senators balked at. The Senate bill made no changes to the estate tax, which currently taxes inheritances over $5 million at 35 percent.
    Here’s Peter Suderman’s idea of a commensurate counter-offer:
    Peter Suderman@petersuderman

    Republicans hear Obama's opening bid, counter with: Eliminate the federal government, except for defense.

    29 Nov 12
    Two possibilities. One: Obama reeeeally wants to avoid the cliff, so he’s engineering some political cover for the other side to compromise. Ante up with a ridiculous bid, then pretend to let Republicans “win” by letting them negotiate him down to, say, “only” a trillion in new revenues. In order to believe that, though, you have to believe that O fears the cliff. Why would he? Polls show that Republicans will take most of the blame, which means not only will Obama have more leverage after January 1 (see my earlier post about that) but he can then blame any economic sluggishness over the next year or two or four on the GOP too. That might be the difference between a Republican Senate versus a Democratic House in 2014. Which brings us to two: He’s either indifferent about going over the cliff or now actively wants it to happen, and since he knows he can count on the press to scapegoat Republicans when it does, he’s decided to shoot for the stars with his “offer” and see how desperate Boehner is. Is the GOP sufficiently nervous about being called enemies of the middle class if a deal isn’t reached that they’ll cave on tax hikes on the rich in exchange for some smaller bundle of concessions, with this insane package the only other alternative on the Democratic side? That’s what O wants to see.

    Exit question: Let it burn?


    Update: NRO’s Dan Foster asks a good question:

    Daniel Foster@DanFosterNRO

    Is the White House proposal supposed to reduce the deficit? By how much?

    29 Nov 12
    We’re supposed to be paying down the deficit here, not squeezing the rich to fund Obama’s next government expansion. How much of this mega-soak is designed to do the former rather than the latter?

    Update: Laughable, literally: http://www.weeklystandard.com/blogs/...an_664210.html

    Mitch McConnell, the Senate Republican leader, says he “burst into laughter” Thursday when Treasury Secretary Tim Geithner outlined the administration proposal for averting the fiscal cliff. He wasn’t trying to embarrass Geithner, McConnell says, only responding candidly to his one-sided plan, explicit on tax increases, vague on spending cuts…

    Geithner suggested $1.6 trillion in tax increases, McConnell says, but showed “minimal or no interest” in spending cuts. When congressional leaders went to the White House three days after the election, Obama talked of possible curbs on the explosive growth of food stamps and Social Security disability payments. But since Geithner didn’t mention them, those reductions appear to be off the table now, McConnell says
    Update: Via NRO, hard to argue with this. http://www.youtube.com/watch?feature...&v=QPKphK1DtO8

    http://hotair.com/archives/2012/11/2...ing-basically/
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    Friday, November 30, 2012
    Obama's terms: Surrender now

    Charles Krauthammer points out that discussions of fiscal cliff negotiations shouldn't focus on the revenue side, but the expense side. The Democrats aren't even acknowledging the problem. Dick Durbin has declared that Social Security reforms should not be part of the discussion because it "does not add a penny to our deficit." Krauthammer quickly disposes of that lie. http://www.washingtonpost.com/opinio...ab3_story.html

    This is absurd. In 2012, Social Security adds $165 billion to the deficit. Democrats pretend that Social Security is covered through 2033 by its trust fund. Except that the trust fund is a fiction, a mere “bookkeeping” device, as the Office of Management and Budget itself has written. The trust fund’s IOUs “do not consist of real economic assets that can be drawn down in the future to fund benefits.” Future benefits “will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures.”

    And draining the Treasury, as 10,000 baby boomers retire every day. Yet that’s off the table. And on Wednesday, the president threw down the gauntlet by demanding tax hikes now — with spending cuts to come next year. Meaning, until after Republicans have fallen on their swords, given up the tax issue and forfeited their political leverage.
    Republicans need to stop fighting among themselves and present a united front that they will not agree to tax increases unless we get real spending cuts, including entitlement reform.

    Obama is claiming an electoral mandate to raise taxes on the top 2 percent. Perhaps, but remember those incessant campaign ads promising a return to the economic nirvana of the Clinton years? Well, George W. Bush cut rates across the board, not just for the top 2 percent. Going back to the Clinton rates means middle-class tax hikes that yield four times the revenue that you get from just the rich.

    So give Obama the full Clinton. Let him live with that. And with what also lies on the other side of the cliff: 28 million Americans newly subject to the ruinous alternative minimum tax.

    Republicans must stop acting like supplicants. If Obama so loves those Clinton rates, Republicans should say: Then go over the cliff and have them all.

    And add: But if you want a grand bargain, then deal. If we give way on taxes, we want, in return, serious discretionary cuts, clearly spelled-out entitlement cuts and real tax reform.
    The President is totally unserious in what he has proposed. He wants tax increases now along with more spending increases. Kimberley Strassel summarizes what the Democrats are offering.

    According to sources on Capitol Hill, the White House wants Republicans to pony up $960 billion in immediate tax increases, which will come from hiking the top marginal rates and increasing capital gains and dividends taxes. That is just for starters. The administration also wants the GOP to surrender an additional $600 billion in revenue via later tax reforms.

    The president's team specified no amounts or details on spending cuts. Rather, the White House wants more spending: at least $50 billion in new stimulus, an extension of unemployment insurance, a one-year deferral of the sequester, new money to refinance underwater mortgages, a Medicare-doctor fix . . . and a partridge in a pear tree.

    Oh, the White House also wants Congress to give Mr. Obama the authority to increase the debt limit, whenever he wants, as much as he wants.

    What do Republicans get in return? Next year, the White House will agree to talk to the GOP about cutting as much as $400 billion from entitlement programs. Maybe. If Democrats get around to it. Which they won't—because they'll have everything they've wanted.
    This is how Obama negotiates. Give me everything I want and nothing that you want and we'll call it a deal.

    How to put this tax-and-more-spending offer in perspective? It is far in excess of what the Democrats asked for in last year's debt-limit standoff—when the political configuration in Washington was exactly the same. It is far more than the president's own Democratic Senate has ever been able to pass, even with a filibuster-proof majority. It is far more than the president himself campaigned on this year
    And although this is not the perception of the media and those paying only minimal attention, John Boehner has already met Obama's demand for more revenue from the wealthy.

    Within two days of the election, Mr. Boehner had offered an enormous compromise, committing the GOP to provide new tax revenue, through limits on deductions for the wealthy. Mr. Obama campaigned on making "the rich" pay more—and that is exactly what Mr. Boehner agreed to give him.

    All that was left for the president to do was accept this peace offering, pair it with necessary spending cuts, and take credit for averting a crisis. Mr. Obama has instead spent the past weeks campaigning for tax-rate hikes. He wants the revenue, but collected only the way he chooses. And on the basis of that ideological insistence alone, the nation is much closer to a crisis.
    So why is Obama doing this? Why is he putting forward such an unserious proposal? It seems more and more that he is quite willing for us to go over the cliff. After all, he'd get lots of lovely new revenue into the treasury if all the tax cuts expire.

    Then again, the most frightening aspect of the White House proposal is that it wasn't an error. Perhaps the proposal was thoroughly calculated. This suggests a president who doesn't care about the outcome of the cliff negotiations—who thinks that he wins politically no matter what. He's betting that either the GOP will be far more responsible than he is and do anything to avert a crisis, or that the cliff gives him the tax hikes his partisans are demanding. Win-win, save for the enormous pain to average families across the country.

    The Republicans will have to contemplate how to deal with such an unserious offer. But in presenting his demands, the president has now made very clear that there is only one side that is working in good faith.
    Don't agree to any one-sided proposal that raises taxes now with just a promise to cut spending and entitlement reform some time later. Those cuts and entitlement reform will never, ever appear. We've seen this over and over.
    Laissez les bon temps rouler! Going to church doesn't make you a Christian any more than standing in a garage makes you a car.** a 4 day work week & sex slaves ~ I say Tyt for PRESIDENT! Not to be taken internally, literally or seriously ....Suki ebaynni IS THAT BETTER ?

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    As Michael Tanner points out, all the media want to talk about are tax increases. It's all part of the liberal agenda. http://www.nationalreview.com/articl...michael-tanner

    Yet the media still seem obsessed with Republicans and taxes: Will they stick to the Taxpayer Protection Pledge or not? Will tax rates go up or will loopholes be closed? How much new revenue will Republicans agree to?

    But there is a profound lack of curiosity when it comes to the other half of this supposed bargain. Remember that hypothetical deal of $1 in tax increases to $10 in spending cuts? Republicans are still being asked about it and criticized for rejecting it. But balancing the budget under that formula would require $9 trillion in spending cuts over the next ten years. When was the last time the president or a Democratic congressman was asked whether or not they would agree to such a deal?

    For that matter, it’s worth noting that more than half of Democratic congressmen and eleven senators have signed a pledge to oppose any changes to Social Security or Medicare. If pledges are the root of all evil, couldn’t we pause for just a moment in our attempts to run Grover Norquist out of town to work up the tiniest bit of outrage about this one?

    In fact, many Democrats actually want to spend more, at least in the short term. The president’s most recent budget calls for $2.6 in increased spending between now and 2022. That’s $1 trillion more than the $1.6 trillion that the president has called for in new taxes. Therefore, the tax hikes would not be used to reduce the deficit, but to finance new spending. And, according to news reports, the president has already floated the idea of still more stimulus spending as part of the fiscal-cliff talks.

    That’s not a “balanced approach.” That’s simply old-fashioned tax-and-spend politics.

    The time may someday come to parse the exact meaning of the Taxpayer Protection Pledge. But for now, Republicans are simply negotiating with themselves and with the news media. Democrats haven’t even come to the table.
    Even the Washington Post is fed up with the Democrats' refusal to address the true drivers of our federal debt. http://www.washingtonpost.com/opinio...s=rss_opinions

    Obama ran on a clear platform of increasing taxes on the wealthy. But he was clear on something else, too: Deficit reduction must be “balanced,” including spending cuts as well as tax increases. Since 60 percent of the federal budget goes to entitlement programs such as Medicare, Medicaid and Social Security, there’s no way to achieve balance without slowing the rate of increase of those programs.

    This could be accomplished in a progressive manner, shielding the poorest beneficiaries from cuts. But that seems less likely to be achieved if progressives boycott serious negotiations by pretending that Social Security and Medicare are sustainable with no reform at all.

    Mr. Obama has understood this since at least 2009, when he told The Post’s editorial board that he would tackle entitlement reform.

    “What we have done is kicked this can down the road. We are now at the end of the road and are not in a position to kick it any further,” he said then. “We have to signal seriousness in this by making sure some of the hard decisions are made under my watch, not someone else’s.”
    We're now seeing that Obama never met any of those sensible things that he used to say about a balanced approach. When has he ever made any actual policy proposal that demonstrated that he truly wanted real entitlement reform or was willing to cut any spending other than defense spending? Just the opposite. So why should we (or the Washington Post) be at all surprised at the negotiating stance he's taking now?

    I still think the best thing would be to propose a version of Simpson-Bowles and try to get some Democratic senators who are up for reelection in 2014 in red states to go along with that. Probably it wouldn't make any difference. It's becoming clearer and clearer that Obama would be quite content to go over that fiscal cliff and get the defense cuts he wants as well as all the increased revenue from taxing everyone that Obama promised to never raise taxes on. And they'll blame it on the Republicans refusal to raise taxes on those earning over $250,000. What could be greater than that for the Democrats? What's a little recession if he can blame the Republicans for it. And you know that the media will be happy to go along. They're already setting the table for that story.

    http://betsyspage.blogspot.com/2012/...ender-now.html
    Laissez les bon temps rouler! Going to church doesn't make you a Christian any more than standing in a garage makes you a car.** a 4 day work week & sex slaves ~ I say Tyt for PRESIDENT! Not to be taken internally, literally or seriously ....Suki ebaynni IS THAT BETTER ?

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