More On Tax Planningfrom The Advisor's Professional Library
- Cafeteria Plans The income tax treatment of cafeteria plans is key to their popularity. Learn how to maximize the tax benefits of these “flexible benefit plans”.
- Health Insurance: Health and Medical Savings Accounts A Health Savings Account is a trust created exclusively for the purpose of paying qualified medical expenses of an account beneficiary. Although they are popular, they are not without their pitfalls and the regulations can be complicated. Learn more about how to avoid federal taxation on the accumulation and distributions of HSA.
In the wake of President Obama’s deal with Republican lawmakers regarding the negotiated package centering on the Bush tax cuts and an extension of unemployment benefits, protest was loud and long on the Democratic side of the aisle. And in a true “Mr. Smith Goes to Washington” moment (well, actually, 517 of them—8 hours and 37 minutes altogether) on Friday, Sen. Bernie Sanders, I-Vt., voiced the disapproval of many Democrats and others in what many called a filibuster.
Sanders, however, wasn’t so quick to characterize his action that way, saying instead that what he was doing was “tak[ing] as long as I can to explain to the American people the fact that we have got to do a lot better than this agreement provides.”
In the speech he gave, Sanders pointed out the expense involved in extending the Bush tax cuts for another two years, as well as the cost of a negotiated change in the estate tax. He also pointed out that a number of billionaires were opposed to the renewal of the tax cuts for their bracket, and criticized the payroll tax holiday as a dangerous step for the future of Social Security.
That wasn’t the only extraordinary event on Friday. Politics as theater continued as former President Bill Clinton and Obama gave a joint press conference in the White House briefing room to tout the tax cut package. Then Obama headed out to attend a Christmas party, leaving Clinton holding down the fort and answering questions not just about the tax package but also about Obama.
Sunday’s talk shows were, of course, full of conversation about the package, which Democrats said was too expensive and gives away too much and which Republicans said did not go far enough. On Fox News Sunday, Rep. Chris Van Hollen, D-Md., who will be the top Democrat on the House Budget Committee, said that to many Democrats, the sticking point of the package arrived at by Obama and McConnellwas the change to the estate tax. The proposed legislation would tax estates over $5 million at a rate of 35%; Democrats want a 45% tax rate on estates over $3.5 million. Rep. Paul Ryan, R-Wisc., who will take over the chairmanship of the House Budget Committee, implied that Republicans would let the deal die if Democrats tried to change it; he added that they would then return to the issue once they take office in January, when they will pass all the tax cuts and “do it retroactively.”
Juan Williams, Fox News contributor, pointed out that taxes on the wealthy are at their lowest in 60 years. “But you’d never know that listening to the Republicans in this country,” Williams said.
On Meet the Press, Austan Goolsbee, chairman of the president's Council of Economic Advisers, defended the deal when host David Gregory pointed out that Ron Brownstein, in his National Journal column, criticized the potential of the Bush tax cuts as creators of jobs: “[This deal] further entrenches the Bush tax cuts, even though the median income and the number of Americans with jobs are lower today than when the tax cuts were originally signed in 2001 (an almost unprecedented decade-long record of futility).” However, Goolsbee also said that evidence shows high-income tax cuts are ineffective as job creators, and “that's a bitter pill to have to deal with.”