Former Alaska Governor Sarah Palin criticized the new tax bill that was signed into law on Friday, Dec. 17, 2010, by U.S. President Barack Obama, complaining that extending the Bush era cuts for only two years brings too much uncertainty into the nation's economy.
Mitt Romney, former Governor of Massachusetts also agreed with Palin by saying that uncertainty is "not a friend of investment, growth, and job creation."
A Compromise Agreement
The $858 billion dollar tax cut bill was the result of a bipartisan accord between Democrats and Republicans. "I am absolutely convinced that this tax cut plan, while not perfect, will help grow our economy and create jobs in the private sector," the president said. "It will help lift up middle-class families, who will no longer need to worry about a New Year's Day tax hike."
Highlights of the New Tax Legislation
- Long term unemployment benefits will be extended for 13 months.
- A one year Social security tax cut will be implemented for all wage earners, from 6.2% to 4.2%.
- Those earning above $379,150, will remain at 35%, instead of increasing to 39.6%. The lowest rate, for individuals making below $8,500 and $17,000 for married couples will stay at 10%, rather than increasing to 15%.
- Itemized deductions for high-income households will be more generous.
- The child tax credit will increase to $1,000.
- The standard deduction for married couples will increase. Without the new tax bill, joint tax filers with incomes at $57,000 and above would have faced higher taxes in 2011.
- Low-income families will see the Earned Income tax credit go up.
- Families with students will receive a series of tax breaks, including student loan interest deduction and an exemption for educational assistance that is employer-provided.
- Expenses for higher education for tuition and related costs can be deducted.
- Students in higher education will be eligible for a tax credit of up to $2,500.
- The top capital gains tax rate of 15% will be extended.
- Top tax rate on dividends of 15% will be continued.
- Teachers can receive a deduction of $250 for out-of-pocket classroom expenditures.
- Tax breaks for paying local sales taxes and using mass transit are in the bill.
- Business tax credits for research and new idea development will be allowed.
- Many retail establishments and restaurants will be eligible for deductions for capital improvements.
- A lower estate tax will be imposed for the next two years, allowing individuals to pass estates as large as $5 million to heirs and couples $10 million to heirs tax-free.
- Depreciation expenses for businesses and tax breaks for investors will be increased.
Opportunity at every Income Level
The new tax bill becomes law on Jan. 1, 2011. Kathy Pickering, executive director of The Tax Institute at H&R Block says altogether, the new tax code will provide many opportunities for families at every income level. "The tax code wants to encourage people to invest in their homes, invest in their education, invest in their retirement, and you have to know about all of these things in order to take advantage of it," she said.
Only time will tell if Republicans are satisfied with the new tax bill compromise agreement. Looking at the history of American politics, it would be an easy guess to say they won't be.
Sources:
Courier-Journal Dec. 17, 2010
SmartMoney.com Dec. 31, 2010
David Keith - David Keith
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