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Reply #12: If you read carefully you will see that I didn't say that the tax cuts ... [View All]

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spin Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Nov-13-10 06:17 PM
Response to Reply #10
12. If you read carefully you will see that I didn't say that the tax cuts ...
need to be renewed.

I said "It probably doesn't matter much whether the tax cuts are extended or not, the important thing is that Congress needs to get off its big fat ass and make a decision."

Businesses hate uncertainty. It's hard to plan for the future, and it's even harder when you have no idea what the future tax rates will be.

Obviously if the tax cuts are not renewed for the middle and lower classes (which is a possibility) many people will find themselves with less weekly income.

What happens on Jan. 1 if Congress does nothing?

Everyone's federal income and investment tax rates will go back up to where they were before the 2001 tax cuts were passed. In other words, your tax bill next year would increase.

If the tax cuts do expire and tax rates go up, you may notice the difference in your wallet as early as January, when your employer starts to withhold more taxes from your paycheck.

The Tax Policy Center estimates that a married couple with two kids under 13 and a household income of roughly $75,000 could end up paying about $2,600 more in federal income taxes next year than they would if the tax cuts were extended.

But the likelihood of all the tax cuts expiring isn't high, since both Democrats and Republicans agree on one thing: They want to extend the tax cuts at least for folks making less than $200,000 ($250,000 for joint filers).

The increase may or may not make a significant difference but knowing what to expect helps to determine whether to hire and how many.

The current situation is like playing chess with a person who has half of his pieces hidden. You calmly wait until he decides to show you what you face.

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