What is wealthy these days anyway? Is it a household with an annual income of $250,000, or is it $1 million?
If we’re going to avoid the dreaded “fiscal cliff,” President Obama and Congress are going to have to decide, potentially in an upcoming lame duck session that political expert Andrew Friedman calls “The Mother of All Lame Duck Sessions.”
During a webinar sponsored by Sammons Retirement Solutions on Nov. 8, Friedman, who is principal of The Washington Update, said the federal budget deficit will become President Obama’s “legacy issue,” which presidents tend to focus on during their second term. He has the rest of this year and 2013 to show he’s going to be serious about deficit reduction, before mid-term elections inevitably take center stage in 2014.
But let’s get back to the wealthy and that fiscal cliff. With Obama’s reelection, Republicans are coming to realize that affluent Americans are going to be subject to higher taxes next year. The question is, how wealthy do you have to be before your tax rate increases?
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The Bush-era tax cuts, which will expire at the start of 2013 without action from Congress, will be the subject of much debate during the lame duck session. In an effort to raise revenue to combat the deficit, Obama and the Democrats do not want to extend the Bush tax cuts for wealthy Americans, which they define as households with annual incomes of more than $250,000. White House senior adviser David Plouffe has said President Obama will veto anything that extends the Bush tax cuts for the wealthy. But the question of how wealthy is wealthy is something that could very well be negotiable, Friedman said during his webinar comments last Thursday.
Republicans, who of course want the Bush tax cuts extended for all Americans, may be forced to (shudder) compromise and accept that said Bush tax cuts will not be extended for Americans with household incomes of, say, $1 million instead of $250,000. The Obama administration would also (shudder) compromise and allow the tax cuts to be extended even to wealthy Americans who fall short of that $1 million household income figure.
See also: Avoiding the fiscal cliff