Will Americans see tax increase in 2011?
December 15, 2010 Leave a Comment
The US Senate is poised to approve the economic package negotiated by President Obama and Republicans in Congress over the course of the previous weeks. The bill primarily focuses on the extension of the Bush-era tax cuts although House Democrats are calling for some revisions once the bill gets to them.
As this is happening in Washington, a recent study has been released by the Rockefeller Foundation revealing the widespread effect of the crisis, which began 2 years ago, to Americans. It states that over 9 out of 10 US households were hit substantially during the period of March 2008 to September 2009.
Many Americans felt the deterioration of their wealth and income during the period which even saw the value of their investments and home fell like a rock.
Many believe that continues to be the case in 2010. Even Federal Reserve chairman Ben Bernanke himself admitted in his own words that recovery in the US economy is “disappointingly slow” despite all the monetary intervention tools they have utilized such a near-zero interest rates and the billions of dollars the central bank have pumped into the economy.
President Obama’s remarks that the compromise package is a “substantial victory for middle-class families” is in defense of a plan that could face a stiff challenge with Democrats in the lower chamber where they believe can cause significant losses in potential revenues for the government thus limiting their ability to implement economy-spurring plans that address the needs of middle-class America.
Once the bill passes the Senate in the final vote, House Democrats are expected to push for a revision of the estate tax which under the Obama-GOP plan, the first $10 million that couples pass on to their heirs will be exempted from taxation. The balance will be subject to a 35 percent tax rate.
Democrats want a return to the 2009 estate tax levels where the exemption is $3.5 million and the balance was taxed 45 percent. Republicans, meanwhile, threatened that any partisan change to the bill would mean the death of the deal and Americans will be forced to brace for tax increase across all brackets beginning January 1.
