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Old 09-24-2012, 09:04 PM   #16
Colleen27
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Originally Posted by mks18412 View Post
Yes, I have seen acouple of sites that give specifics. Meaning what tax (or new tax) and how much of an increase. I dont think I would be allowed to post since it is political.

I have seen that if Congress does not step in income tax alone will increase by 3%.
The only specifics available are on which tax rates were enacted as temporary and are scheduled to expire... The 2% FICA "holiday" is simple enough to put a number on, but the rest is more complicated than a fixed percentage. The 10% bracket will go away, the marriage penalty will return, and the top 4 marginal rates will increase by 3-4%, along with a slew of other changes to specific tax rates (dividends, capital gains) and rules about deduction phase-outs.
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Old 09-25-2012, 10:02 AM   #17
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The same way we have adjusted to the reduction in taxes that have been happening regularly for the last several years. If we have gotten used to having a bit more spending money due to the tax cuts we have received, we will respond by not spending quite so much when they go back up to what they used to be.
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Old 09-25-2012, 11:47 AM   #18
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Thanks for bringing this up. Honestly, I haven't been looking too closely at this simply because it was all still up in the air, and like many of the PPs, I have other things going on between now and 1 Jan.

I think it's a shame that politicians are delaying this important work/not saying what they really will do because they're too busy trying to get re-hired and afraid of taking a position (any position!)

If everything was to hit, worst-case-scenario-style, we would have to slow our rate of debt repayment (we're trying to pay everything off right now), which is what has been happening with consumer goods' prices fluctuating, etc.

Even if we just get hit with the FICA and nothing else, it would be more than my annual raise, so we're going to get hit one way or another, but we're pretty much just in a wait-and-see.
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Old 09-25-2012, 12:29 PM   #19
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What is the marriage penalty?

I got married 4 years ago, the first year DH was a student most of the year, and the next 3 it's seemed like our tax % has gone down every year. I have no concept of what our taxes would be like if the current breaks disappear.
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Old 09-25-2012, 12:30 PM   #20
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Originally Posted by Zhoen View Post
Thanks for bringing this up. Honestly, I haven't been looking too closely at this simply because it was all still up in the air, and like many of the PPs, I have other things going on between now and 1 Jan.

I think it's a shame that politicians are delaying this important work/not saying what they really will do because they're too busy trying to get re-hired and afraid of taking a position (any position!)

If everything was to hit, worst-case-scenario-style, we would have to slow our rate of debt repayment (we're trying to pay everything off right now), which is what has been happening with consumer goods' prices fluctuating, etc.

Even if we just get hit with the FICA and nothing else, it would be more than my annual raise, so we're going to get hit one way or another, but we're pretty much just in a wait-and-see.

But wasn't the FICA deduction temprorary from the start? So folks who factored that into their budgets should have only done so for the short term.

It's like a bonus, some years you get it some years you don't.
It was just a 2 year deal to jumpstart spending not to factor into living expenses. The lower rate was supposed to expire in 2011 and we got a break.

Or am I misunderstanding?
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Old 09-25-2012, 12:37 PM   #21
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Originally Posted by mistysue View Post
What is the marriage penalty?

I got married 4 years ago, the first year DH was a student most of the year, and the next 3 it's seemed like our tax % has gone down every year. I have no concept of what our taxes would be like if the current breaks disappear.
It refers to a glitch in the tax code where a married couple with both spouses working would have a higher tax liability when filing jointly than two individuals would pay if they file separately. Not every married couple is affected and the number of those who are affected would vary based on each year's tax rates.
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Old 09-25-2012, 12:37 PM   #22
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OP, I understand you being concerned about it.

DH and I have looked into it and if all the supposed changes go into effect, we will lose over $7,000 worth of income next year.

No, we aren't panicking, but we are aware of what may possibly happen come Jan. 1st and we are prepared.
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Old 09-25-2012, 12:45 PM   #23
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We are in the fortunate position that a good chunk of my DHs income comes from a year-end bonus. I always sit down right before that check and do a quick run through of our taxes and then adjust the bonus withholding to negate any huge shortages.

I personally suspect the FICA reduction will be renewed for 2013 if not permanently. The economy is still quite anemic and every wage earner suffering through a 2% cut would be hurtful to any growth.

The rest is going to be up in the air as we go through another "Who isn't paying enough in taxes?" battle next year. It'll be a contentious show for sure.
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Old 09-25-2012, 01:14 PM   #24
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We are in the fortunate position that a good chunk of my DHs income comes from a year-end bonus. I always sit down right before that check and do a quick run through of our taxes and then adjust the bonus withholding to negate any huge shortages.

I personally suspect the FICA reduction will be renewed for 2013 if not permanently. The economy is still quite anemic and every wage earner suffering through a 2% cut would be hurtful to any growth.

The rest is going to be up in the air as we go through another "Who isn't paying enough in taxes?" battle next year. It'll be a contentious show for sure.
I hope not!! Under funding SS is a huge mistake. It will just go insolvent even earlier!
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Old 09-25-2012, 01:59 PM   #25
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Originally Posted by mistysue View Post
What is the marriage penalty?

I got married 4 years ago, the first year DH was a student most of the year, and the next 3 it's seemed like our tax % has gone down every year. I have no concept of what our taxes would be like if the current breaks disappear.
Two things: First, the standard deduction for a married couple filing jointly was, prior to the Bush cuts, 167% of the individual standard deduction rather than 200% (in practical terms, about $2000 more income is taxable). Second, the line between the 15% and 25/28% bracket for married filers is 167% of the income limit for single filers, rather than double it.

The first bit affects every married couple who doesn't itemize, the second affects only those with taxable income of over about 60K.
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Old 09-25-2012, 01:59 PM   #26
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I hope not!! Under funding SS is a huge mistake. It will just go insolvent even earlier!
That's true. But millions of people out of work and not paying into SS at all doesn't help much either.
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Old 09-25-2012, 02:05 PM   #27
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I hope not!! Under funding SS is a huge mistake. It will just go insolvent even earlier!
I suspect that's a question far more complicated than just percentages... You know, the old Econ 101 example of selling ten pizzas at a $3 profit per pie vs selling twenty at a $2 profit. If a lower rate has effectively boosted consumer spending and therefore hiring it could mean a bigger bottom line - more people working and paying at the lower rate being better than fewer people paying a higher rate.
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Old 09-25-2012, 02:46 PM   #28
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I suspect that's a question far more complicated than just percentages... You know, the old Econ 101 example of selling ten pizzas at a $3 profit per pie vs selling twenty at a $2 profit. If a lower rate has effectively boosted consumer spending and therefore hiring it could mean a bigger bottom line - more people working and paying at the lower rate being better than fewer people paying a higher rate.
It was not done for that reason. It was done when the "make work pay " expired. Bad idea than and bad idea now.
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Old 09-25-2012, 03:00 PM   #29
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It was not done for that reason. It was done when the "make work pay " expired. Bad idea than and bad idea now.
I don't see much point in debating the reasoning behind a decision that is done and over with. The better approach would be to evaluate the effect of the change over the time it has been in effect and compare that to projected consequences of reverting to the original rate. A spending slowdown right now would be disastrous at a time when we're still not adding enough jobs to support an economic recovery.
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Old 09-25-2012, 03:08 PM   #30
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I don't see much point in debating the reasoning behind a decision that is done and over with. The better approach would be to evaluate the effect of the change over the time it has been in effect and compare that to projected consequences of reverting to the original rate. A spending slowdown right now would be disastrous at a time when we're still not adding enough jobs to support an economic recovery.
We have had the tax breaks I for three years and the unemployment rate is no where near where they said it would be at this time. It did not work so we should abandon the idea.
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