Tuesday, June 8, 2010
What is Gonna Happen to (My) Bush Tax Cuts at the End of 2010?
Get ready then for a doozy. Perhaps the biggest time-bomb facing you right now in a very direct personal way, even more than health care, is this: ‘What is going to happen to ‘MY’ Bush Tax Cuts at the end of 2010?”
After all, you have had them for the past 8 years now and saying goodbye to them is not going to be easy. Especially in this economy. But it could and probably will happen so you better get used to it.
One thing people forget in this age of ‘tax withholding’ is that the money you earn is yours first to keep and decide what to do with it on a personal basis, not the federal government’s. Those ‘tax cuts’ represent money you earned to begin with; it is just a matter of how much you should be sending to the government on an annual basis that is the question
Making political predictions is as easy as making weather predictions: You hit one or two big hurricanes or snowstorms right and you are a ‘genius’! And if your predictions fail to come true, so what? No one will remember your predictions in a couple of weeks anyway.
That is one reason why Jeanne Dixon became ‘famous’ with her prediction of the Kennedy Assassination. She made so darn many predictions as a soothsayer that when the ‘big one’ actually happened ‘as she said it would’, suddenly she was on the cover of every magazine in America like a modern-day Oracle of Delphi.
So here’s the ‘real deal’, something you can take to the bank, if you have any money left:
“If nothing is done by Congress and the Obama White House by December 31, 2010, the end of this calendar year, your taxes are gonna go up, and in many cases such as estate taxes, way, way up, overnight by January 1, 2011.’
How can this be true in a democratic republic like ours where Congress is supposed to vote on such weighty matters as ‘increasing taxes’ before they excavate money from our back pockets?
The answer is quite simple: When the Bush Tax Cuts were passed in the 2003 EGTRRA (‘Eg-tra’, ‘extra’, get it?) legislation, there was a ‘sunset’ clause in the tax authorization bill that said that all of those tax cuts would expire on December 31, 2010. Passed by a GOP Congress; signed into law by former GOP President George W. Bush.
The reason was simple as well: Without the sun-setting of these provisions, the CBO forecasts for budget deficits going forward beyond 2010 could have been far larger in the second decade than the first. And since no logical Administration wants to steer The Republic of the United States of America into the ditch of bankruptcy by irresponsible fiscal malfeasance (do they?), the Bush tax cuts were automatically set to expire at the stroke of midnight, December 31, 2010.
Pass the Bush tax cuts in 2003 and the world will look all rosy by 2010, right?
Apparently, that one did not turn out right for some reason. Like the financial meltdown. The Wall Street and Detroit bailouts. The ‘Cash for Clunkers’ deal. Too much real estate debt. Derivatives. Credit Default Swaps. The Greatest Recession since the Depression.
We are now staring down the cannon barrel of $1.3 trillion annual deficits for the rest of the decade and an enormous national debt of $24 trillion that will drain close to $1 trillion in interest costs per year when all is said and done.
We are going to post a trilogy of sorts over the next couple of days outlining what we think is going to happen with these Bush tax cuts set to expire in 210 days, give or take a few. So you might want to stay tuned for the next couple of musings so you can tell all your friends what is going to happen before they occur and mystify them at the same time.
As always, there is a disclaimer: Consult your tax advisor and accountant before making any financial decisions. We are not financial consultants and these views are solely the opinions of our authors. We have seen it all before and there is nothing new under sun when it comes to politics or legislation, it seems.
Maybe even Jeanne Dixon would have gotten this prediction right way back when, sort of like a modern-day Nostradamus.
Picture courtesy of http://voices.washingtonpost.com/reliable-source/2009/07/rs-dixon27.html