Tax Cuts

Some basic facts:

  • President Obama has passed 25 separate tax cuts.
  • President Obama’s stimulus package included $300 billion in middle class tax cuts — one of the largest in history.
  • The recent healthcare reform law includes tax credits and savings for small businesses and working people.
  • Unlike President Bush’s 2001 tax cuts, which went to the wealthiest 2.2%, President Obama’s tax cuts overwhelmingly benefit working and middle class families — 95% of all Americans.

Here are some of the new tax credits available through the Recovery Act alone that you may be eligible for:

  • The Making Work Pay tax credit – Ninety-five percent of working families are already receiving the Recovery Act’s Making Work Pay tax credit of $400 for an individual or $800 for married couples filing jointly in their 2009 paychecks – and will continue to see these benefits in 2010.
  • Tax credits for college expenses – Families and students are eligible for up to $2,500 in tax savings under the American Opportunity Credit as well as enhanced benefits under 529 college savings plans, which help families and students pay for college expenses.
  • The Homebuyers tax credit – Homebuyers can get a credit – up to $8,000 for first-time home buyers and up to $6,500 for upgrade homebuyers – for homes under contract by April 30, 2010 and purchased by June 30, 2010 under the Homebuyer tax credit. Over 1.7 million households have already taken advantage of the First Time Homebuyers tax credit.
  • Tax credits for energy efficient renovations – Taxpayers are eligible for up to $1,500 in tax credits for making energy-efficient improvements to their homes, such as adding insulation and installing energy efficient windows.
  • The vehicle sales tax deduction – Taxpayers can deduct the state and local sales taxes they paid for new vehicles purchased from Feb. 17, 2009 through Dec. 31, 2009 under the vehicle sales tax deduction.
  • Expanded family tax credits – Moderate income families with children may be eligible for an increase in the Earned Income Tax Credit and the additional Child Tax Credit.
  • Tax-free unemployment benefits – Thanks to the Recovery Act, individuals who received unemployment insurance in 2009 do not have to pay taxes on the first $2,400 of such earnings.

Find out what tax cuts you may qualify for: Use the White House online tax calculator.

[Source: PolitiFact]

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HOW TO TALK TO YOUR CRAZY TEA-PARTY UNCLE ABOUT TAXES

After decades of relentless right-wing propaganda, knee-jerk anti-tax, anti-government thinking has become ingrained in many of us. Here’s some tips on how to respond to our tea-party brothers and sisters when they come back at you with Rush Limbaugh talking points on taxes:

‘Obama is raising my taxes!’

  • Actually… you probably got a tax cut. 95% of us (new #’s suggest it’s more like 98%) got a tax cut in 2009, but most don’t know it. In a recent CBS News Poll, only 12% knew they got a federal tax cut last year.
  • President Obama and Congress passed 25 separate tax cuts. The stimulus package included $300 billion in tax cuts for the middle class, one of the largest in history.

‘I didn’t get a check like I did from George Bush.’

  • President Obama didn’t send out a highly publicized separate U.S. Treasury check, as President Bush did. Instead our payroll taxes went down, which increases the likelihood it will boost the economy faster, but slower tax cuts are better for economy than simply a one-time $350 check.
  • (For example, even just $13 more in your pocket a week amounts to $676 more in your pocket over the course of a year.)

‘I’m sick of paying so much in taxes.’

  • Nobody likes to pay taxes, but they support our American way of life.
  • Who pays for our military, our food inspection, our roads? Who creates the economic and educational foundation businesses need to thrive? Our taxes.
  • Ask yourself: which popular government programs and services are you willing to live without?

‘Government is corrupt and can’t do anything right.’

  • Our security, our education, our health, our infrastructure, safe food and clean drinking water, are all provided by our government, and are essential to our quality of life. It is those areas we don’t notice that prove where it works best. Government is just us, We, The People. We certainly need to do better, but degrading civic participation like community organizing acheives the opposite
  • The solution isn’t bigger or smaller government but effective government.

‘I’m worried about the national debt we’re passing on to our children.’

  • So are we. We spent the last decade borrowing money to give tax cuts to the rich, while fighting two wars. At the same time, we allowed massive corporations to dodge taxes, while poorly regulated financial institutions made billions bundling bad loans and selling them to the public. In other words, we have borrowed and squandered trillions of dollars. This is where the debt came from. Now we have to pay it off.
  • Again, the richest households, with incomes over $250,000, received $700 billion in tax cuts between 2001 and 2009, money that was just added to the national debt. [More Info]
  • This is like robbing Peter to pay Preston Winthrop the Third!
  • Wall St. & their Corporate cheiftains have elevated tax dodging to an art, avoiding almost $1 trillion in taxes over the last decade. Exxon actually received a $36 billion tax credit, helping it achieve record profits. Regular people can’t afford this privilege. [More Info]
  • All this tax avoidance shifted the bills onto middle class taxpayers and our national debt –which will be probably be paid by middle class taxpayers.
  • The solution is to make Wall St. titans and massive corporations accountable for paying their fair share.

‘Tax cuts create jobs’

  • The evidence since our financial collapse proves otherwise. Instead of jobs, trillions of dollars in tax cuts went into high-yeild speculative investments like derivatives and sub-prime mortgages.
  • While incomes for a few very rich people went up almost 400%, the average American’s income inch up just 13%.[Source]
  • The last time incomes were this divided was just before the Great Depression.

‘Tax cuts pay for themselves.’

‘Wouldn’t a Flat Tax Be Fairer?’

  • Most proposals to create a national sales tax would further shift tax responsibilities off of the very wealthy and onto low and middle-income households.
  • A much simpler tax code along with a progressive income tax is a one solution that’s been tried before: the 1930′s through 1960. Those weren’t “socialist” policies then and they made our economy much more stable too boot. [SOURCE]

Don’t the wealthy already pay a disproportionate share of taxes? I heard that the top 1% pay most of the federal income taxes.

  • This is true, high income earners pay a high percentage of total revenue because the inequality of income has become so extreme in the U.S. during the last decade.
  • While incomes for the top 2% of the population have soard 399%, middle and low income Americans have barely seen their own take home pay rise 13%. Meanwhile, while the top 0.1% of U.S. taxpayers – the wealthist 1 in 1000 of us – have seen their share of federal taxes drop from 60 to 33.6% between 1960 and 2004, the rates of the middle class have remained the same. [Source]