What’s the scoop on the state of the Bush tax cuts?

Word on the street is that the Bush tax cuts, which were infamous for their effect on the pocketbooks of the wealthy, will be coming to an end as of next year.

Yes. The word is that President Barack Obama is hoping to let these tax cuts fade away into oblivion.

Well, before we let the talking heads on CNN, MSNBC and FOX tell us what to believe, we should have some idea of what exactly this means. If things go as the Obama Administration anticipates, the tax cuts for those making $250,000 and more will lapse.

But anyone making under that amount will not be affected.

You see, the tax rates for the wealthy will climb from 35% to 39.6% and from 33% to 36%. Capital gains tax also stands to be affected by the lapse.

Why the uproar? Well, money talks. And the wealthy purportedly have the money to invest into the flailing economy. With higher taxes, they say, they shall have less to invest into the economic recovery.

But are we assured that more disposable income in the hands of the wealthy will be used to invest in business growth? Or, should the legislators not place such hope on uncertainty and rather, look to what they DO know– that the slight increase in tax on the wealthy will generate more money for government programs?

According to Treasury Secretary Timothy Geithner, a lapse of the Bush tax cuts would only affect the richest 2 to 3 percent of the population.

Of course, in this economy, there is no certainty nor has there been any certainty for the past few years. Some are proposing a phasing in of the tax increase, in order to provide some cushion for the fragile economy.

Furthermore, income tax and capital gains tax won’t be the only way that the wealthy are affected. The estate tax repeal was a major focus of controversy earlier this year. I’ll be discussing Obama’s estate tax proposals  in subsequent blog posts.

Related Articles from The Savvy Press

Other posts by this Author