Every three or four decades, Washington DC will surprise us... A week or two ago, we begged for Barack Obama and the GOP to compromise, and work out a bi-partisan Tax Bill package. Honestly, they did better and more comprehensively than even we though they could. Even if it is only for a few weeks, Congress has gotten the message, and we can't criticize Obama on this one. No, it's not perfect, but it is one of those cases where action is better than inaction...
In a stunner to us, and some Democrats, was that the Bush Tax Cuts will stay in place fully. To offset this, the bill hammers Estate Taxes at 35% for those over $5 million. Kids, have Mom & Dad sign everythign over NOW, or don't let them die for the next few years.... For those of lower incomes, Earned Income credits stay as well. No, we're not fans of getting tax breaks for having kids, but we'll live with it...
And what about the rest of us? The middle class? Well, there's an interesting cut for us - one that does leave a lot of questions in our minds... The first-ever cut to the Social Security tax on your paycheck will be part of the Plan as well.. The rate will drop 2 full points , from 6.2% to 4.2% applied at your first $100k or so of income. So, a Joe like me will pay about $1000 less in taxes a year. No, $20 a week will not change my life, but it will help pay for gas - or whatever the hell I want to do with it, rather than DC.
As nice as it was, it throws up a huge red flag for us: how is Social Security going to be funded with a 30% cut in it's main source of revenue? It's already paying out more than it takes in, so where's the stopgap for the future. Huge cuts in benefits? We know that Obama wanted a cut that would be immediate in people's paychecks, as opposed to a 2% income tax cut on the first $100,000 - but he may have cut the nose off Social Security face in the process. We await the answer to this question. We're certain that we're not the only ones who noticed this...
Like most decent legislation, neither side got everything they wanted, but both sides got some of it... In the end, tax cuts are good for all Americans and for Washington. There's enough here to make lower, middle and upper income Americans, along with businesses looking for Capital Improvements breaks (to the tune of 100%) to let everyone walk away happy...
Congress may finally figured out that if they want to stay, then bipartisanship is the way to it. It's like in 'A Beautiful Mind', when they go to the bar, and the hot girl is there. Everyone walks away happy by leaving the Hot Girl alone, if they go for the thing they can get, rather than what they want. In this case, the hot girl is incumbency.. If DC works well, then they get to stay - and we all benefit. Adam Smith needs revision....
www.youtube.com/watch?v=v5jrNoNNtrE&feature=related
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