Posted on Friday, August 20, 2010
The Bush tax cuts took few points off of incomes under $250,000 and loosened rules governing IRAs, in particular raising the annual contribution limit from $2,000 to $5,000.
Bush's cuts also increased minimum income levels on the Alternative Minimum Tax (AMT), rules designed to prevent too many deductions by higher income folks (but thanks to nflation middle-class taxpayers have also been impacted).
President Obama's has pledged to not to raise taxes for anyone under the $250,000 threshold so, these particular tax cuts will probably be extended. Unless political bi-partisianship rules or the up coming report from the Presidents Deficit commission pre-empts extension.
Another expiring Bush tax reduces the price tag for higer end earners from 39.6% to 35%. Estate taxes are also at issue. Pre-2001 they were 55% of estates over $1 million. It disappears this year. The President supports the 2009 version of 45% with a $3.5 million exemption. Republicans favor 15%-20%.
The 2003 Bush cuts reduced taxes on dividends and capital gains to 15%. After December 31st they revert to the 2007 20% and dividends are taxed as "ordinary income," up to 39.6%. The President favors keeping the tax cuts for folks earning under $250,000, with capital-gains tax returnign to 20% acorss the board. But corporate earnings are already taxed at 35%. Taxing dividends as ordinary income on top of that translates to an excessive 61% tax PLUS state taxes.