Fiscal Cliff Very Real to Middle Class
Every year we teach a 60-hour tax certifcation course required to become a certified tax preparer in the state of California. I was just re-reviewing all the Bush tax law changes that would revert back if our illustrious leaders can't come to a compromise soon. The Bush tax law changes basically rolled back rates by 2% for each tax bracket for you and me. It also eliminated the so called marriage-tax-penalty for married filers that don't itemize. It reduced capital gains rates and taxes on dividends. So if these expire, we are all pretty much going to feel at least a 2% hit on our take-home pay.
I use to think it was right that taxes on dividends should be minimized due to earnings already being taxed at the corporate level. Then I did some reading on just how many major US corporations don't pay any taxes at all. So I've changed my mind in the spirit of compromise. Somewhere these earnings need to be taxed, if not at the corporate level than to those investors that benefit from dividends being passed through to them.
And how 'bout Costco deciding to deliver its dividend n December?! If more corporations dedide to do that, we might end up receiving the benefit of a different sort of economic stimulus.