Without an extension of the Bush tax cuts, Federal income taxes will be raised for everyone including the middle class. At this point, it is unlikely that the Bush tax cuts will be extended prior to the end of 2012 since the current elected officials will be in office until January 2013. So it's higher taxes for all.
For the President and Congress, this approach will be a painless way to increase taxes, which needs to be done to address the deficit. The Democrats will blame Republicans for not passing a middle class tax cut, and the Republicans will blame Democrats for not extending the Bush tax cuts. President Obama will explain how partisan politics and a divided government prevented him from helping the middle class with a tax cut.
However, whatever the reason, the middle class should plan for now on paying higher Federal income taxes in 2013.
For more on Reflections and Musings, check back every Saturday for a new segment.
This is not financial or tax advice. Please consult a professional advisor.
Copyright © 2012 Achievement Catalyst, LLC
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1 comment:
I will never understand some people's rationale for ending the Bush tax cuts. It seems like many people want to see the Bush tax cuts end so that "the rich" will pay more taxes even if that means they personally will also pay more taxes. It's like I'm going to the market and I'm charged $25 more for my purchase but the checkout teller says it's okay because the person before me was charged $40 more.
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