The Fiscal Cliff Fact Check

Checking the facts on President Obama and the ‘fiscal cliff’ deal.

There are some important facts which President Obama fails to mention in a Web video concerning the fiscal deal that leave the wrong impression concerning its impact on both the deficit and the taxpayers:

The president tells everyone that “middle-class families” Re not going to have to pay anywhere up to $2000 in additional taxes this coming year. This is certainly true in regard to income taxes however Obama fails to also tell the public about a payroll tax cut expiring. That expiration means that approximately 77% of all taxpayers are going to be paying more taxes this year. That number includes those who earn between $75000 and %100,000 who will be paying up to $1200 additional. This will come as quite a shock to this group who fit well in the broad definition of middle class which the president consistently uses.

President Barack Obama at the Fiscal Responsib...
President Barack Obama at the Fiscal Responsibility Summit. (Photo credit: Wikipedia)

President Obama also tells the public that this agreement will “reduce the deficit”. The truth is that over the next ten years approximately four trillion dollars will be added to that deficit due to Bush tax cut extensions for all but the top one=percent of taxpayers. This deal will actually ‘reduce the deficit’ if it is compared to what it would have been had the Bush tax cuts been extended for every single taxpayer.

The fact of the matter is that all of the president’s comments on the fiscal-cliff dealings  may leave the impression that most people will be paying the same taxes as last year. This however is just not correct. The president leaves out the fact that a two year Social Security payroll tax deduction was permitted to expire resulting in people paying more this year in taxes.

Fiscal Cliff Deal – 77 Percent Of All Americans Set To Pay More Taxes

Fiscal Cliff Deal

The President has claimed that the Tuesday night fiscal cliff deal will reduce middle class taxes in America. However, taxes for most Americans will increase in 2013. The tax relief that has been built into the package will add nearly $4 trillion per year for the next 10 years to the existing $16 trillion debt. The fiscal cliff deal passed by the Senate and the Congress will not stop the Social Security payroll tax cut from expiring. This means that more than 75 percent of American households will face a higher federal tax liability in 2013.

President Barack Obama signs the executive ord...
President Barack Obama signs the executive order creating the Middle Class Task Force at the White House. (Photo credit: Wikipedia)

Tax Policy Center’s analysis indicates that families with annual income between $40,000 and $50,000 will have to pay $579 extra middle class taxes in 2013. For those earning between $50,000 and $75,000, the liability will increase by $822. Individuals earning more will have to shell out higher taxes. The Bush era tax rates for individuals earning less than $400,000 and couples earning less than $450,000 have been extended. Those earning more will pay tax at a higher rate.

The highest tax rate will increase from 35 percent to 39.6 percent. Those who fall in the highest tax bracket will have to pay a higher rate of investment taxes at 20 percent. Obama’s health care law could also increase the tax outflow of high income families. Investments of individuals earning more than $200,000 per year and couples earning more than $230,000 per year will attract a new 3.8 percent tax.

According to Tax Policy Center, families with annual income between $500,000 and $1 million will have to pay $14,812 extra tax in 2013. Those earning more than $1 million will have to shell out an additional $170,341. Obama tried very hard to include the payroll tax cut for 2011 and wanted to extend it through 2012. However, Democrats and Republicans were not keen and both agreed to let the cut expire.

Wages as high as $113,700 pay a 12.4 percent Social Security tax. Employers pay half and workers pay the other half. The latter’s share was cut from 6.2 percent to 4.2 percent for 2011 and 2012. This will result in middle class taxes savings of about $1000 a year.

The fiscal cliff Congressional battles have just begun. Over the next few weeks, fiscal cliff agreements relating to debt ceiling and automatic spending cuts affecting the Pentagon will be hammered out. Democrats will continue to push for tax hikes while Republicans will demand spending cuts and entitlement reforms.

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Harry Reid’s Desperate Gamble Over Mitt Romney’s Taxes

Senate Majority Leader, Harry Reid
Senate Majority Leader, Harry Reid (Photo credit: Talk Radio News Service)

Mitt Romney’s Taxes

Lost in the politically generated issue of Mitt Romney’s taxes is the issue of Harry Reid and his own tax information. Harry Reid has jumped up and donned a fool’s mantle once again, and this time with a wild claim by an anonymous source, that Mitt Romney has not paid taxes for the last ten years. Less ridiculous would be if Reid held a press conference to say that he has spotted UFOs in the Nevada skies. Harry Reid is accustomed to playing with fire and getting burned, but the Nevada Democrat cannot seem to stop picking up matches and lighters.

Now the Republican party is attacking Reid, with Republican Party Chairman, Reince Priebus, saying that Reid was a dirty liar, and Republican Senator Lindsey Graham saying that Reid is making things up. On top of that is a rising murmur among conservatives that Harry Reid should release his own tax records before he accuses other people. Reid has said that he does not make much money as a senator, but the records are released each year. This is false on two fronts. As of 2010, Harry Reid was listed as being worth ten-million dollars. While certain financial records of his are released each year, those are the cherry-picked records. Reid has never had a full tax disclosure, and refuses to release all of his records to this day.

Any person possessing common sense would know that anybody with the kind of fortune that Mitt Romney has would be swarmed by the IRS at the first hint of impropriety. The Democrats ask a simple question which sounds logical at first blush. They want to know if Romney has nothing to hide, then why will he not release his tax records. It would be interesting if Mitt Romney were to call a press conference and declare that one of Harry Reid’s mistresses has said that she has witnessed Reid beating his wife on numerous occasions. He could add that the mistress will not identify herself, but if Reid is not a wife beater, he should come forward and prove it. Of course the reason Romney does not release his records is that if those records found their ways into the Democrats’ desperate paws, they would be able to twist the numbers in any creative way they wanted to suit their purposes. Harry Reid’s spokesman, Adam Jentleson recently said that this tax issue is the biggest issue of the campaign. Given the state of his party’s jobs record, he had better hope so.

Apple Keeps Cash Overseas Because Of High Taxes At Home

Due to high taxes, Apple plans to continue holding its cash overseas, company says

Apple will in the next three years spend around $45 billion as part of a program launched on Monday that will see shareholders get the first dividend since 1995.

However, that money will not come from the $64 billion held by the company in foreign countries. This is because the government charges a very high tax rate for repatriating money.

Peter Oppenheimer told analysts and investors during the Monday conference that the company does not want to incur the cost of repatriating foreign cash at the moment.

Apple together with other tech giants like Microsoft and Google hold more than $1 trillion in foreign countries are pushing for a tax holiday.

There have been heated debates on the hill regarding the issue. Kevin Brady, a Republican from Texas is the main sponsor of a bill which has 109 co-sponsors. Critics say that giving tax breaks to companies with overseas operations is like rewarding the rich for not paying their taxes.

Initially, the Obama administration supported the proposal. However, his tax reform blueprint launched last month is totally against the idea.

While Apple does not usually discuss such matters in public, Monday’s conference was specifically meant to get the message across to Congress.

Oppenheimer claimed that corporate tax of 35 percent paid by companies when bringing foreign earnings home was an economic disincentive.

Oppenheimer further said that the company has already expressed its view to the Obama administration and Congress.

CEOs Press Congress And Obama For Lower Taxes And Smarter Regulation

Dozens of CEOs freshly out of their meeting with the Blue Dog Coalition have worked through a Business Roundtable lobbying meeting to reveal their proposals for boosting the economy today.

Their plan, known as Taking Action for America, is calling for a balanced federal budget, reform of regulations at the federal level and a lower tax rate for corporations that would use a territorial tax system as well as other changes.

President of Roundtable, former governor of Michigan, John Engler (R) and the contingent of CEOs met with President Obama Tuesday evening and are scheduled to meet with Timothy Geithner, Treasury Secretary today.

Jim McNerney is chairman of Roundtable as well as CEO of the Boeing Co. and says the purpose of the meetings is to focus on re-energizing the economy that has been slow in growth in order to put Americans back to work.

According to McNerney, the country cannot be successful in attempts to repair the economy if businesses and the government remain divided, and as long as the government remains divided due to partisan politics.  McNerney says that the changes should not wait until after the elections in November to act on these proposals, including lower taxes.

Dow Chemical Co. president and CEO, Andrew Liveris, says that the country cannot afford inaction from the nation’s capitol.

Members of the Roundtable, who are CEOs of the nation’s largest corporations, stress that smart regulation does not mean doing away with all regulations.  However, the group has identified some of the regulations considered costly to businesses and overly complex.

President and CEO of Procter & Gamble, Bob McDonald chairs the tax and fiscal policy committee of Roundtable and claims that the US corporate tax will be highest in the world within the next three weeks as Japan chooses to lower its rate.  Obama has recently released a proposal to lower the corporate tax rate from 35% to 28%.  The CEOs however are pushing for lowering the rate to 25%.

McDonald says that it is time to stop the talks and get something done.