President Obama and this Congress have kept us in the dark about what our income taxes are going to be for the better part of a year. That has made it tough for consumers to decide how much they really have to spend. It’s made it tough for business folks to decide whether they can afford to hire new workers, or keep the ones they have. This uncertainty has hurt the economy and job creation.
Finally, the powers that be in Washington have apparently made a decision. Here are the major points: The Bush Tax Cuts that were set to expire December 31st will be extended for everybody for two more years. (In my view they should have been made permanent.)
Unemployment benefits, which have been extended several times already, will be extended for another 13 months. (In my view, this should have been paid for by reducing the unspent Stimulus money by its $56 billion cost. Instead, they’re just adding another $56 billion to the deficit, which is completely irresponsible.)
Social Security payroll taxes will be cut by 2% for 2011. $40 billion worth of Stimulus tax cuts will be continued – specifically the earned income tax credit, the child tax credit, and the American Opportunity Credit (tax credit for college tuition.) And the federal inheritance tax (the death tax) will be 0 for estates under $5 million, and 35% for estates over $5 million, for two years.
And finally, businesses would be able to write off 100% of their capital purchases next year.
So there you have it. My thoughts? It’s better than nothing – but should have been a lot better. Tax cuts should be made permanent to be most effective – so individuals and businesses can make long term plans. Permanent tax cuts would have been much more effective if one truly wants to stimulate the economy and create jobs.
And our Washington leaders’ inability to come to an agreement until the 11th hour has contributed to the stagnant economy we’ve seen for far too long and the resulting high unemployment rates. A better deal should have been struck – long ago. But sometimes it takes a two-by-four upside the head in an election to get Congress and a President to act. Long overdue, lacking in many ways, but better than nothing. We sure deserve better.