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UPDATE - 1/4/2013: The Fiscal Cliff Fix of 2013 has capped charitable deductions for high income earners, likely resulting in reduced charitable deductions. Those who say your giving should be from the heart and should not depend on getting something back, such as a tax deduction. Those people are economic imbeciles for not understanding whole this reduces charitable giving.
I'll try to explain this simple math to them: Many people decide to give a certain amount of money to a charity, let's say $1,000 a year OUT OF THEIR POCKET. For an affluent individual in the state of California paying a combined 50% (approximate rate) in state and federal income tax, they would contribute to their favorite local charity, the Homeless Shelter, by giving them $2,000. Since they are in the 50% tax bracket, the donation would save them $1,000, so $2,000 (charitable donation) - $1,000 (taxes saved) = $1,000 in OUT OF POCKET cost to them - thus, their annual $1,000 donation. When the Fiscal Cliff solution comes into play, since they no longer can deduct the donation due to deduction limitations on high earners, they would NO LONGER contribute $2,000 to the charity, but half as much, at $1,000. Thus the nonprofit Homeless Shelter would be shorted $1,000, which they would have to make up somewhere.
Where is that somewhere? Reduce costs? Yeah, right - they already operate on a shoestring budget greatly assisted by charitable giving and volunteers. So they turn to the government to make up that difference, thus growing our government ever-larger. This may or not have been a desired side effect of the Fiscal Cliff legislation, but it certainly favors the thinking of the left.
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UPDATE - 1/2/2013: My prediction that we'd go off the fiscal cliff died yesterday, but though my prediction was TECHNICALLY correct, we bounced back up from the cliff rather quickly (1 day!). What about the deal itself? Predictably, the Republicans abandoned their principles, held their noses, did the right thing, and voted for the Senates bill that backs the nation back from the cliff, but not by much!
It really frustrates me that the media (Wall Street Journal, San Luis Obispo Tribune), in general, does not report what is ACTUALLY IN THE BILL, so that we can decide for ourselves what to think of it. The best I could do was this little blip in the Wall Street Journal, if I can actually find it, but I can't find it online, but here's the
WSJ Article on Avoiding the Fiscal Cliff 1/2/2012.
What was in the bill that passed? Well, nobody puts out a list of what's in it, and what was left out that they discussed leaving in, but here's my best effort in a short time at what was in the bill that passed:
- Income tax: top rate for high earners went from 35% ($388,350 per year for joint filers AND single filers) to 39.6% (the "Clinton Era" tax rate, $450,000 for joint filers and $400,000 for single filers)
- Capital gains rate: top rate for high earners went from 15% ($70,700 per year for joint filers and $33,350 for single filers) to 23.8% ($450,000 for joint filers and $400,000 for single filers) - includes 3.8% Obamacare Surtax
- Dividend tax rate: top rate for high earners went from 15% ($70,700 per year for joint filers and $33,350 for single filers) to 23.8% ($450,000 for joint filers and $400,000 for single filers) - includes 3.8% Obamacare Surtax
- Personal exemptions phaseout and Pease limit on itemized deductions: apparently went from no income limit to $300,000 for joint filers and $250,000 for single filers
- Social Security / FICA tax (employee portion): went back up for EVERYONE from 4.2% to 6.2% with the earnings application ceiling increasing from $110,100 to $113,700.
- ObamaCare payroll tax surcharge went from nonexistent to 0.9% ($250,000 for joint filers and $200,000 for single filers)
- Estate Taxes: went from 35% on estates values above $5,000,000 to 40% on estates values above $5,000,000
- Medical device tax: went from nonexistent to 2.3% for all medical devices manufactured in our country
- Alternative Minimum Tax: permanently adjusted for inflation
- Permanent extension of expanded adoption credit
- Permanent extenion of expanded dependent care credit
- 2 year extension of $250 deduction for teachers spending their own money on school supplies
- 2 year extension on sales tax deduction in lieu of state income tax deduction
- 2 year extension of charitable donation of IRA assets up to $100,000 for people 70 1/2 years and older
- Avoided the Dairy Cliff (you'll have to look this one up yourself - suffice it to say that milk prices will NOT double, as they would if this was NOT averted)
- I believe that unemployment benefits were extended, but as MAJOR as that is, I can't find it in the articles I am reading.
Most of these changes are awful, and to the extent that they increase revenue, all that and more is spent in the same bill by our Federal government. What we get is increased taxes and EVEN LARGER increased spending. This deal is still a budget bloater!
Now get back to work, people!
UPDATE - 12/30/2012: My prediction that we would head over the Fiscal Cliff on 12/31/2012 appears to be coming true, but I'm not gloating - I'm crying. The stock market is just now recognizing that reality, and has begun to tank. However, those with cash on their hands should consider investing in the U. S. stock market if it continues to go down.
The Fiscal Cliff negotiations between the Democrats and Republicans are just too messy, distracting, and out-of-touch with reality to report here, or frankly to even follow! If you want to punish yourself, however, go ahead and go on-line and read all about, but I'm NOT going to put a link in here for you to make it easy - out of compassion for you. Suffice it to say that I believe that our elected representatives as a group are not representing us well, and "we the people" will pay the price. As always, I hope I'm wrong, and that our Congress does the right thing and comes up with a good compromise to deal with the Cliff. Sigh.
UPDATE - 10/12/2012: Just like I predicted that Obama would win re-election months before he did, I also predicted (right after the election) that we would go off the "so-called" Fiscal Cliff. I should have put it in my blog then, but I didn't - but now I have! After we go off the cliff in 2013, there will be a lame and poorly thought out "compromise" to bring us back from the bottom of the cliff (remember, we just went over it - we must have landed somewhere below it) that primarily or exclusively favors increasing taxes, closing loopholes, and generally tightening the stranglehold that our current system has on the producers, entrepreneur's and innovators. This result will be what Obama has called a "balanced approach" to "solving" the Fiscal Cliff - that is, balanced heavily in his favor.
UPDATE - 10/12/2012: I'm tired of this BS from Obama about that he won the election, and therefore gets to spike the football for his team. Last time I checked, he was president of all of us in this great nation, and not just his side. He continues to campaign for a "balanced" solution, but only proposes terms that Emperor Hirohito of Japan can relate to. Here's how I keep "score" of who won the election:
- "People's House": Republicans,
- State Governor's: Republicans (29 Republicans, 20 Democrats, 1 Independent).
Looks like a pretty even scorecard to me. The Electoral College was a landslide for Obama - no doubt about that. However, many look to the popular vote for the degree of a mandate. As far as the final popular vote tally, google does not give me a clear indication of that count, so
here is an article (click to read) that seems fond of discussing the degree to which this election between Obama and Romney was close. From googling around, it seems the final total of the popular vote was somewhere around 51% to 48% - around 3% (why is it so hard to get the final tally, or am I just looking in the wrong place?).
ORIGINAL ARTICLE: 10/11/2012: You knew I would have something to say something about this eventually - right? I like the statistics below put out today in a recent poll taken by McClatchy-Marist that appeared in the 12/11/2012 edition of the San Luis Obispo Tribune (note to Tribune: when was poll taken? degree of accuracy? who was polled, etc. - come on guys - lets ground our reality a bit!). Anyways, though I'm not happy with how the questions are framed (because they skew the answers to the questions), they are still interesting results - you should read them for a snapshot of how the American public is feeling about this stuff. Note that I have substituted "we" for the "government", as we really are the government - we certainly elected them.
Are you concerned about the Fiscal Cliff? Yes 78%, No 22%
Should we compromise or stand on principle? Compromise 74%, Stand on Principle 21%
Should we raise taxes on the rich (the top 2%) and keep the Bush/Obama tax cuts for everyone else? Yes 57%, No 40% (note that it is not clear what the alternative to this question would be - assumedly letting them rise for everyone? Who knows? The article did not say, making this a POOR poll question, IMO).
Splitting the above vote by Democrat and Republican, here's what we get (same question):
Should the we raise taxes on the rich (top 2%) and keep the tax cuts for everyone else?
Democrats: Yes 75%, No 20%
Republicans: Yes 30%, No 68%
Do you oppose letting the current income tax rates expire? Yes 74%, No 20%
Do you oppose letting the current 2% payroll tax cut expire? Yes 50%, No 33%
Do you oppose letting the Medicare eligibility age increase from 65 to 67 years old? Yes 59%, No 40%
Do you oppose cutting overall spending for Medicare? Yes 74%, No 23%
Note that this has already happened and is thus an unfair and poorly advised question. Read about
the Medicare cuts of $716,000,000,000 already made and baked into Obamacare. Ironically, though the previously referenced article makes a case for the fact that the $716,000,000,000 are not cuts, it becomes clear from reading the article that they are, indeed cuts - by most reasonable definitions, anyways. Example from article:
"One big chunk of money will be saved by reducing unjustifiably high subsidies to private Medicare Advantage plans that enroll many beneficiaries at a higher average cost than traditional Medicare."
Aside from inflammatory use of the opinionated term "unjustifiably", the statement illustrates that Medicare Advantage subsidies (note: ALL medicare is subsidized) will be reduced - this is what we in the real world call a cut.
In conclusion, this question is a fallacy, as Medicare has already been cut. The correct would have been to ask:
Do you oppose cutting overall spending for Medicare in addition to the $716,000,000,000 that has already been cut?
Do you oppose cutting Medicaid (medical care for the poor)? Yes 70%, No 26%
