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Monday, December 31, 2012

President Obama: Fiscal Cliff Deal "In Sight"

Posted by on Mon, Dec 31, 2012 at 11:06 AM

President Barack Obama seemed surprisingly upbeat during televised remarks just completed at the Eisenhower Office Building in Washington, DC. "It appears that an agreement to prevent this New Years tax hike is in sight," Obama said. "But it's not done."

The president said that in addition to raising taxes on the wealthiest two percent of Americans, the deal being worked out would extend tax expiring tax credits for tuition, clean energy, and working families with children, as well as extend unemployment insurance benefits for two million Americans. Unconfirmed reports say that taxes would rise to Clinton-era levels on individuals with incomes over $400,000 a year, and households over $450,000.

What doesn't seem to be part of the agreement at this time are comprehensive spending cuts. Obama told the audience that he'd hoped for balanced approach toward reducing the deficit—some sort of "grand bargain"—but "with this Congress, that was obviously a little too much to hope for at this time."

Market indices are currently up on the news.

 

Comments (30) RSS

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30
@28, I'm sure you can figure out why Obama isn't cutting taxes for those making under $250,000. 1) Because he's not a dictator; he's one-third of the government; 2) Because no one's cutting taxes for anyone; they are just not reinstating them to what they were before Bush cut them for high earners.

Tophoos, you may not be rich but at $50K you're not "lower income".
Posted by sarah70 on January 1, 2013 at 12:24 AM · Report this
Will in Seattle 29
@27 lots of people do.

Here's a free one: If you're young, you should max out your 401(k) or 403(b) and contribute to a Roth IRA or IRA. You can burn the IRA for educational expenses, and rollover old 401(k) or 403(b) into a Rollover IRA and then use it for educational expenses. Live in an area where people make less than you do and own not lease cars (exception: electric cars).
Posted by Will in Seattle http://www.facebook.com/WillSeattle on December 31, 2012 at 4:46 PM · Report this
Supreme Ruler Of The Universe 28
Once again this is a situation, like many in the last few years, where I can either lose big or break even.

So, this is the way you manipulate people...you make them think that they've ended up with a "tax cut" when in fact you've simply left taxes as is.

Lost in this debate is any other opinion or nuance. For example, why isn't Barack Obama cutting taxes for people making less than $250,000?

I propose that the first 250K for everyone be completely exempt from taxation, along with the first $1 million in assets. Anything beyond that is open season.
Posted by Supreme Ruler Of The Universe http://www.you-read-it-here-first.com on December 31, 2012 at 4:23 PM · Report this
27
I want to meet the person who takes W-i-S's financial advice. I really do.

Can someone please take his financial advice then post about it? I'll buy you a beer. I'm good for it. Promise.
Posted by six shooter on December 31, 2012 at 3:41 PM · Report this
TLjr 26
Egad, Jeeves, I'm ruined.
Posted by TLjr on December 31, 2012 at 2:13 PM · Report this
Timrrr 25
@20 & 21 (in reference to @6): Actually that's close but not quite right:

That extra 3.8% on Cap gains tophoos mentioned was a part of the Affordable Care Act and is only assessed on capital gains in excess of half a million dollars ($500,000) for those people with an adjusted gross income higher than $250,000/yr.

And, as @22 said, we're over the cliff now anywho:
C-SPAN: No Vote in House Today
Posted by Timrrr on December 31, 2012 at 2:00 PM · Report this
Will in Seattle 24
@22 I'm breaking out the champagne tonight!
Posted by Will in Seattle http://www.facebook.com/WillSeattle on December 31, 2012 at 1:59 PM · Report this
Will in Seattle 23
So, if @21 is correct, this is still, historically, a capital gains maximum tax rate HALF what we have had for most of this country's existence of such taxes. 40 percent would be a prudent maximum, with 50 percent capital gains on "carried interest" which is used to fluctuate the market and add noise.

That is, if you're a Capitalist and not a neo-Komrade like Boehner is.
Posted by Will in Seattle http://www.facebook.com/WillSeattle on December 31, 2012 at 1:59 PM · Report this
Max Solomon 22
and... no vote today in Boehner's congress. everyone panic!
Posted by Max Solomon on December 31, 2012 at 1:52 PM · Report this
21
@20 After reading articles about 23.8% for high income, what I'm interpreting from that statement is:

People making HIGHER than 400k will be taxed at 39.6%. (PERIOD) Next statement: Capital gains and dividends will be taxed at 20% witht he same income thresholds (applies to anyone making less than that 400k, and if you make more than 400k, you will be taxed at 23.8%)
Posted by tophoos on December 31, 2012 at 1:50 PM · Report this
20
@top - The capital gains hike being discussed will have the same income thresholds as the top marginal income rate hike. In other words, you're safe unless you hit $400k or whatever they settle on. Details matter. Next outrage?

From Ezra Klein: "Here are the details, as multiple sources close to the talks have described them to me: The top tax rate rises to 39.6 percent for individuals making more than $400,000 and families making more than $450,000. Capital gains and dividends will be taxed at 20 percent with the same income thresholds. ..."
Posted by mayberrymachiavelli on December 31, 2012 at 1:28 PM · Report this
19
Obama Readies Gift for GOP
Anyone looking at these negotiations, especially given Obama’s previous behavior, can’t help but reach one main conclusion: whenever the president says that there’s an issue on which he absolutely, positively won’t give ground, you can count on him, you know, giving way — and soon, too. The idea that you should only make promises and threats you intend to make good on doesn’t seem to be one that this particular president can grasp.
http://www.commondreams.org/headline/201…
Posted by anon1256 on December 31, 2012 at 1:26 PM · Report this
Max Solomon 18
@3: unofficially, they never did. officially is what i'm askin'
Posted by Max Solomon on December 31, 2012 at 1:23 PM · Report this
17
@15 /16 I work as an auditor with an accounting degree aware of IRAs. But this is money for me to make a deposit on a house in the near future. Dumping it in any retirement plan isn't really an option.
Posted by tophoos on December 31, 2012 at 1:17 PM · Report this
Matt the Engineer 16
@15 I think [top] is saying s/he's not rich. Selling today and buying tomorrow locks in the gain at today's 15%. Though you're totally right about the IRA benefits.
Posted by Matt the Engineer on December 31, 2012 at 12:43 PM · Report this
Will in Seattle 15
@13 and you would be wrong. You could still hold them and until you sell them, there is no capital gains tax to pay.

Why do you have them in a taxable account anyway? Set up a Roth IRA with a decent (e.g. TD or some canadian regulated firm) stock brokerage account and "deposit" a portion in each year. Seriously, hire a good lawyer and good accountant if you have substantial wealth.
Posted by Will in Seattle http://www.facebook.com/WillSeattle on December 31, 2012 at 12:33 PM · Report this
14
I wonder if anyone's ever found that 2.3 trillion dollars that went "missing" from the Pentagon yet?
Posted by Spindles on December 31, 2012 at 12:30 PM · Report this
13
@10 I'm in no way rich at 50k annual. But I have been holding AAPL from 160 and LVS from 14. I know I should have left long ago. I want to keep holding them, but if capital gains increase, it would be better to let it go and buy it back later. I'm wondering if it is increasing to 20% or not for the lower income folks.
Posted by tophoos on December 31, 2012 at 12:27 PM · Report this
Will in Seattle 12
oh, I should point out I meant muni bonds. distressed corporate bonds can get semi-decent returns, but stocks still rule.
Posted by Will in Seattle http://www.facebook.com/WillSeattle on December 31, 2012 at 12:09 PM · Report this
11
Fiscal Cliff Deal "In Sight"

Way out in the water
See it swimmin'...
Posted by mayberrymachiavelli on December 31, 2012 at 12:08 PM · Report this
Will in Seattle 10
@1 and @3 tied for the New Years Win!

Also, note that the normal capital gains tax rate is 40 percent, it has been kept artificially low for the last decade.

@6 talk about moronic. With earnings in the 22 percent range (at least that's what I get, if you count dividends and cap gains), stocks are way better than bonds (which in our state give you NO TAX GAIN since a person pays no state income tax) and much much better than current 0.25 to 0.75 percent interest on deposits. Stop pretending you know what you're doing and hire a real accountant and real lawyer, if you actually (doubt it) are rich.
Posted by Will in Seattle http://www.facebook.com/WillSeattle on December 31, 2012 at 12:08 PM · Report this
Tracy 9
@2 Thanks for the long quote and link. Interesting stuff...
Posted by Tracy on December 31, 2012 at 12:04 PM · Report this
8
@5 If Obama agrees to the chained CPI in return for all that I'll be a happy man.
Posted by Ken Mehlman on December 31, 2012 at 12:04 PM · Report this
7
making $300K thank god I won't have to pay the extra what, $1500? (3.5 points times $50K excess over $250K).

Wow, if I had to pay that extra $1500 not only would it mean one week less of hotel type vacation -- just four weeks, not five, usually in Oahu in February -- of course I would feel so unoved I would immediately fire my employees. This is how we job creators think, we'd rather not have employees, and have no profit, than have to pay what we paid under Clinton!

Posted by the rich suffer little on December 31, 2012 at 12:00 PM · Report this
6
I'm reading that the capital gains rate will increase to 20% or 23.8%. Is that only for the "high income earners" and will remain at 15% for the "middle class"? Or is it to rise to 20% and will be 23.8% for the top earners?

I'm debating wether or not to drop all my stocks and take my gains with 15% rate.
Posted by tophoos on December 31, 2012 at 11:58 AM · Report this
Goldy 5
@4 The capital gains rate would also rise to 20 percent, plus the increase that's already slated to come under Obamacare.
Posted by Goldy on December 31, 2012 at 11:46 AM · Report this
4
The Repubs became deficit hawks in August of 2008 when they realized that McCain wouldn't win. Mitch McConnell led the change. As for $400,000 being the cut off for tax increases, those people don't pay income taxes but take their income from capital gains. Why, pray tell, is the capital gains rate at 15% and why do people with large stock portfolios not pay property tax on that property as people with homes do?
Posted by Why are there cars? on December 31, 2012 at 11:36 AM · Report this
3
@1 Did they ever?
Posted by Ken Mehlman on December 31, 2012 at 11:33 AM · Report this
sikandro 2
Sorry for the long quote beneath, but it's one of the most interesting things I've read lately regarding cuts in public spending and austerity measures. It's from a recent piece by John Lanchester in the London Review of Books (linked below) that's really worth reading.

"In the October edition of its regular World Economic Outlook, the IMF studied the question and announced that governments had been basing their calculations on the effects of austerity using a multiplier of 0.5. So for every £1 billion removed from government spending, GDP would contract by £500 million. The IMF looked at the relevant historical data, and concluded that the real multiplier for austerity-related cuts was higher, in the range of 0.9 to 1.7. So that same package of £1 billion in fact removes as much as £1.7 billion of output. This was a jaw-dropping thing to discover, not just because it was surprising in itself, and because it explained the surprising-to-governments economic damage being done by austerity packages, but also because the people saying so were the IMF. The very same IMF whose off-the-shelf policy recommendations for indebted governments and struggling economies always, but always, involves swingeing packages of spending cuts. In terms of the surprise, and its source, the IMF announcing that the multiplier effects of spending cuts had been underestimated was like the BMA announcing that they had studied all the relevant evidence and come to the conclusion that exercise is bad for you."

http://www.lrb.co.uk/2012/12/21/john-lan…
Posted by sikandro on December 31, 2012 at 11:25 AM · Report this
Max Solomon 1
does this mean that the GOP officially doesn't give 2 shits about balancing the budget?
Posted by Max Solomon on December 31, 2012 at 11:10 AM · Report this

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