The end of the year is coming quickly, and if you're paying attention to the debate about the Bush tax cuts, you may have noticed that nothing has happened yet. There hasn't been any action on extending the tax cuts for either the higher income earners, or everyone else. If they aren't extended, everyone's taxes will go up.
Currently the Democrats and Republicans are trying to work out some sort of a compromise that would allow the tax cuts to be extended. The Democrats only want to extend them for those making less than $250,000, while the Republicans want them extended for everyone. The Republicans have drawn a line in the sand saying that they won't allow anything except an extension of the cuts for everyone, and have promised to not vote for cloture on anything else in the lame duck session until the tax cut problem has been addressed.
As of yesterday it sounds like most people think that the cuts will be extended for all taxpayers, but possibly not permanently. In other words, they'll have to address the issue in a few years once again. Why are the Democrats willing to cave in on this one? Possibly for concessions on extending unemployment benefits – as those are expiring soon as well for those who have reached the 99 week limit, and the unemployment rates continue to rise – up to 9.8% last month.
Geithner and Lew appear to be stuck in the middle, sources said. A senior Democratic aide said that the White House’s message has been clear: “You can’t leave town without doing something.”
Sources have predicted that the final agreement could include a full extension of the tax cuts for two to three years and an extension of unemployment insurance and a package of other tax extenders. [source]
What do you think will happen? Will they pass an extension before the session ends? Or will there be too little room for compromise?
Good Reading From Around The Blogosphere
Lots of great articles from around the blogosphere this week. Here are a few of my faves.
- How Does a Reverse Mortgage Work?
- FICO 8 Mortgage Score Could Make it Harder to Get Approved
- How Does a Reverse Mortgage Work?
- How to Become More Self-Sufficient
- Why Budgeting is Like Dating
- Canadian financial planning designations and courses to look for in a financial advisor.
- How to Debrief Yourself After Interview Rejection
- Choosing a Lender: Tips to Help You Make Informed Student Loan Decisions
- LIFE Can Mess Up Your Budget
- Using Welfare Benefits to Pay For Marijuana and Psychics?
- You’re Rejected! How I Use Rejection To Motivate Me Every Single Day
- Peanut Butter and Jelly
- How My Great Dane and I Got Cheated By a Fake Charity
- Dealing With Poor Performance: Lessons From Simon Cowell and Jesus Christ
- Quick Money Making Ideas to Help You Get Out of Debt
- Financial Freedom For All The Bravehearts
Hope you have a great weekend!
I heard this on NPR the other day and I got a little worked up. So they are going to extend tax cut AND extend unemployment benefit. This is the compromise they come up with?
If I do this at home, it would be like this. I can’t pay the credit card bill, oh let’s open another credit card and we can continue another few months. Seems like a bad policy to me.
I was for extending the unemployment benefit, but now forget it. No more extension and no tax cut if I was running the country.
Financial Samurai says
It will definitely be extended for sure!
Joe Plemon says
The tax cuts will probably be extended, but at the midnight hour to allow for all political trade offs to take place.
Barb Friedberg says
I think income tax rates will be extended, not sure about dividend and capital gain rates. I’m worried about the estate taxes. Hope they don’t return to 55%.
Khaleef @ KNS Financial says
I agree with Joe. They knew for a while that they were going to vote to extend them, but this is how they will sneak other things in as well!