Taxes

Everything Changes on New Year's Day

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One curvy dime

Oh hey, speaking of presidential promises, remember this one from the 2009 State of the Union?

In order to save our children from a future of debt, we will also end the tax breaks for the wealthiest 2% of Americans.  But let me be perfectly clear, because I know you'll hear the same old claims that rolling back these tax breaks means a massive tax increase on the American people:  If your family earns less than $250,000 a year, you will not see your taxes increased a single dime. I repeat: not one single dime.

Jump ahead to this week, and this headline: "Congress lets 50 tax breaks expire." From the Forbes.com story:

Among the disappearing breaks are the research tax credit and an annual alternative minimum tax "patch," which keeps 23 million additional middle-income Americans from being forced into calculating and paying the dreaded AMT.

I'm no mathematician, but I'm pretty sure that 23 million represents a bit more than 2% of Americans…. Also, as the article makes clear, the lapsed corporate R&D credit (of which I have zero opinion on) represents another broken Obama promise.

"Over the years, we've allowed this credit to lapse or we've extended it year to year, even just a few months at a time," he said. "Under my budget, this tax credit will no longer fall prey to the whims of politics and partisanship. It will be far more effective when businesses … can count on it."

Yeah, but what about the "JS"? WHAT ABOUT THE "JS"??

Let me be perfectly clear: I do not mourn the passing of the "railroad track maintenance credit; special expensing rules for U.S. film and television productions; and tax laws that help Puerto Rican and U.S. Virgin Islands distillers." I hate targeted corporate tax breaks, and think The Code should fit on a matchbox. But when the president says "not one single dime," he is making a promise that he cannot keep, even if he was so inclined, which he's not. (For examples of why not, read Jacob Sullum, or scan this list of health care tax hikes flagged by Americans for Tax Reform.)

Also, if anyone can explain what the hell's happening to the Estate Tax on Jan. 1, and how that may or may not impact the $249,999 family, please share in the comments.