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  • October 22, 2008 06:07 PM EDT by Brian Sullivan

    Cut Some Here, Get Hit With More There

    Thanks to some of our smart viewers and readers for pointing this out...not sure why we haven't thought about this before but this is why I rely on all of you so much to help us find good ideas....

    As we've discussed, under the Obama-Biden tax plan many Americans will get a tax credit at the end of each year.  You can analyze the amount on the popular "tax cut calculator" on his website.

    Here's the problem.

    The sweeping tax cuts President Bush pushed through a few years ago are set to expire in 2010 and fully end in 2011.   Those cuts lowered the tax rates for most Americans by 3% (36% - 33%, 28% - 25%, etc).

    The question now becomes, what happens to those tax cuts?   If they are allowed to expire and not renewed by Congress any tax savings for much of that "95%" Obama talks about would be wiped out.

    Let's examine.

    The calculator notes that a family of 4 making $50,000 - $75,000 per year would see a savings of $1,000 on their taxes.

    But if the current tax cuts expire and are not renewed, most tax rates would go back to where they were before, or up 3% across most tax schedules.

    So while tax calculations can be tricky, a rough estimate would be that the same family of four making $60,000 who "saved" $1,000 under this new plan would then see an increase of $1,350 bucks on their taxes ($0 on the first $15,000 and then an increase from 15 to 18% on the rest) after 2010.    That's a net increase in taxes of $350 dollars.

    Cut on one side, greater increase on the other.

    Other media have also noted the same thing about the cuts.   In an article earlier this year CNN says:

    Allowing the cuts to expire would add $1,900 to the tax bill of a family of four with an annual income of $60,000, Bush said. All told, he added, 43 million families with kids would have to pay an average tax increase of $2,323.

    Online magazine Slate noted:

    I know there's a lot of hype to the contrary, but look at the numbers. If you and your spouse have a taxable income of $60,000 a year, you've had almost a 24 percent income tax cut since President Bush took office. (And ditto if your income was just $20,000.) Meanwhile, the folks who make $350,000 a year got a cut of only about 12.5 percent; those who make $1 million a year got an even smaller cut.

    We don't know for certain about the future of those cuts, but it's not looking like they will stand based on previous Congressional efforts to "torpedo" them.

    Clearly each tax filer's situation is different with unique deductions.  But since the calculator on Obama's website is also a rough estimator, I think it's fair to ask the question of Congress - what happens to the Bush tax cuts?

    If they aren't extended, then many of those people thinking they are going to get a tax cut are in for an unpleasant surprise after 2010.

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DEBBI PATTEN

AMAZING how so many people could figure this one out, but the left doesn't get it, nor does Obama/Biden discuss it. Maybe Mccain should start talking about it.

October 22, 2008 at 7:23 pm

Karl

Well said. From my perspective it would have been nice if our elected officials would have spent more time over the last two years discussing issues of tax reform and economic indicators rather than talking about steroids in baseball. Personally, I get upset about last years congressional activity, especially given whatwe are going through now. Their paychecks are tax dollars that were spent even more foolishly than the meddling in the markets we're going through now. Ok, rant complete ... stepping down from the soap-box

October 23, 2008 at 1:04 am

K. Ross

Brian, Great point! The whole tax code needs a serious revamping. I realize that many discussions on the Bush tax cuts have been ignored. It would seem that our public servants in Congress just don’t get it. They really have been allowed to do as they please with no repercussions. Both candidates have talked about taxes, healthcare and education and sometimes it just sounds like Charlie Browns teacher. I just can’t understand why more American citizens don’t take the time to learn about the Fair Tax. I have looked at it with the left eye, the right eye and both eyes. It really does make sense, however it won’t get traction unless more people learn about it. Lobbyists and special interest peddlers won’t like it much but then they are a main root in the problem.

October 23, 2008 at 9:48 am

Scott Bourne

Y'all got to remember with out the current TAX codes we would not need the IRS. That would lay off a bunch of people. We would also not need CPA's, Jackson, H & R block, etc,. Un believable amount of money being spent by lobbist for these companies. So if you go to a fair tax you put a hole bunch of people out of work and the companies they work for make sure to keep the "TAX CODES" as complicated as they can so they can make money. Neither party wants to do away with the current unbalanced unfair "TAX CODES" because both sides recieve huge donations from the companies that prepare taxes every year. Think about this 400 million Americans get there taxes done every year and maybe 1/4 do their own. 300 million roughly pay to get them done by one of the companies so at 75 to 150 a pop that is a good chunk of change. These are rough guesses so don't quote them please From rough estimates I would say you are talking about at least a 40 billion dollar industry based on our "TAX CODES" that is a real conserative guess. It is probably a lot more then that if you check into every thing. Looks like if they went to a fair tax we could us 40 billion to bail out other wall street idiots. Peace out Scott

October 23, 2008 at 10:19 am

s.r.b.

Fair tax is the only way to go... At least that way the illegals would have to pay their share! We could probably fund health care with the annual budget of the IRS if it was abolished! The fair tax would also take care of the social security and medicare problem and promote productivity and growth because everyone would be able to keep 100% of their paycheck and decide themselves how to spend it, savers would be rewarded for a change! And best of all, no more lobbyists or empty promises from our candidates running for office! Everyone needs to get behind this and push for the needed reform!

October 23, 2008 at 10:48 am

Ken Krah

Some investment experts are afraid that if Obama is elected they will lose big time. It has been said on TV.

October 23, 2008 at 10:54 am

John

Great article. Sooner or later "We the working, taxpaying people" are going to have to figure out what to do with an entire government structure that no longer listens to us!

October 23, 2008 at 11:11 am

Mae Davis

I just can't believe how many people are completely snowed by Obama! Talk is pretty; but facts don't back him up. This is a great piece that I hope more people pay attention too. I am single with no dependants(all grown) and he would really hurt me if he is elected. Older people beware! You don;t have a savior in this canidate! At least McCain has sense enough to know how Washington works and knows where to put on the brakes. And lets not even get started on the wars. Who do you really want watching your back? Someone whose been there; or someone that may have played with toy soldiers a few years ago? Please!

October 29, 2008 at 9:14 am

about this blog

  • Brian Sullivan joined FOX Business Network (FBN) in April 2008 as an anchor. He co-anchors the 10am-12pm ET hours of the FOX Business block. Prior to joining FBN, Sullivan served as an anchor for Bloomberg Television where he hosted the programs Morning Call and In Focus.

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