Thursday, December 2, 2010
Taxes and Political Gamesmanship
My personal opinion is that the government does not have a tax revenue problem, but rather a spending problem. Consequently, my personal preference would be that all of the current tax rates be extended for everybody. Yes, even for those evil rich folk. After all, I have never gotten a job from a poor person.
Both sides seem to be digging in their heals on the issue of taxes. The Democrats insist on raising taxes on those that make $250k a year or more. The Republicans don't want anybody to have to pay the higher tax rates. Unfortunately, right now, the Democrats still have control of both Houses of Congress. Today, Nancy Pelosi held a vote to extend the tax rates for those making less than $250k. Most believe that it will never make it out of the Senate.
While I fundamentally agree with the Republican position, we are getting dangerously close to not resolving this issue, at least not before January 1st. Eventually, I think the Bush tax rates will be extended, at least temporarily, for all earners. If a compromise isn't reached, it will have a negative impact on the people that both sides say they want to help.
For example, a person making between $58-68k per year could see their tax rate rise from 15% to 28% if the rates aren't extended by January 1st. I like what I heard Congressman Paul Ryan say tonight on Hannity. He said if the rates do not get extended before January 1st, when the GOP take control of the House in January, they will introduce legislation to reinstate all the current rates back to January 1st. That is all well and good, but that person making $60k per year will have a harder time absorbing even a temporary increase in withholding compared to the person making $250k.
I have to decide by the end of next week what I want to do with my open enrollment for health care. As I said previously, my share of my current insurance is going up 23%. The decision on whether or not to stay with my current health plan could be greatly influenced by the status of the tax rates. If the rates stay the same, it would be tough, but I might be able to absorb the increased insurance premiums for a couple months until my annual review when I would be scheduled to get a pay increase.
If the tax situation is not resolved, I figure that my withholding would increase by at least $100 per pay period. I know that I could not absorb both an increase in insurance premiums and an increase in taxes, even for one pay period. However, if I had to switch to a lesser health insurance plan, I would run the risk of further financial hardship if anybody in my family would happen to get sick or need any tests. These people are fucking with the financial well being of myself and others like me, and it is pissing me off.