Bush Tax Cut

The Tax Attic with Jerry Coon — September 23, 2010

September 23, 2010 // 0 Comments

Bush tax cuts set to expire Congress is really making it difficult to tax plan. Eventually, they will have to make decisions on a number of tax issues. Complicating the matter is that Congress can make a decision by doing nothing. The Bush tax cuts are all set to expire on December 31, 2010. If Congress does nothing, we will revert to the tax laws that were in effect before President Bush and a Republican-controlled Congress enacted them at various times during his presidency. Most of them came into being when the Economic Growth and Tax Reconciliation Act was passed in 2001. It is highly unlikely that Congress will do nothing. This is not a do-nothing Congress. They have passed a mammoth Health Care Reform bill. The American Recovery and Reinvestment Act, i.e. the Stimulus Bill, seemed to spend more money than existed in the world in total before about 1900. (Just kidding. I don’t know the real statistic. The real year could be only before 1800.) They recently passed a Small Business Jobs Act that will spend a paltry $42 billion dollars. No, they are not afraid to spend money or to pass bills. They are just reluctant to do something immediately before the coming election that could and would influence the election. Raising taxes, even if it is for 2011, could and probably would influence the election. The Tea Party is just hoping that a Democrat-controlled Congress passes a bill that dramatically increases taxes. I will go as far as to say that they are praying for a dramatic tax increase. I would also be shocked if that happens. What is highly likely is they will pass a bill after the election that will pick and choose what to do with each of the tax cuts. Some will be modified, such as the tax brackets with the 10% tax bracket disappearing. Some will be extended, such as keeping the child tax credit at $1,000 instead of it reverting to $500. Some will be allowed to sunset and go away such as the capital gains in the 15% tax bracket getting taxed at 0%. It will be interesting to see how this all turns out. By not extending any of the relief provisions that […]