Are you rich? I suspect the answer from most of us, especially given the events of the past couple years, would be a resounding "NO". Most of us might even take that up a notch to "HELL NO".
But if this administration allows some or all of the current tax cuts to expire at the end of this year, you might be surprised. For example, according to the most recent NAR statistics, the median income for a licensed broker/broker associate in 2010 was $49,100. Does making just under $50k a year qualify you as rich? Well if the tax cuts expire you'll be rich enough to pony up an additional $923 next year.
You rich SOB's making between $50 and $75k/yr will get to kick down an extra $1,126 next year. (figures supplied by Associated Press 9/3/2010)
The administration is caught between a rock & a hard spot here. Knowing they're in for a major drubbing in 2 months, do they stick to their guns (campaign promise) and dip even further into our pockets at a time when their vaunted recovery is sputtering like an old Model T? Or do they try to limit tax breaks only to the 'wealthy' and put off dinging the 'average taxpayer' for another year or two?
Of course this panacea will be vehemently opposed by Republicans who rightfully claim that what's good for one is good for all - and back it up with data showing that every dollar not taxed from the wealthy actually stimulates job creation.
Or in this divisive political climate, do they have a Kum-ba-Ya moment and just kick the can down the road by extending the current cuts a year or two? Democrats claim that will add about 1/2 trillion to the national debt for every year the cuts are extended.
The last alternative is to just do nothing - allow the gridlock to unfold, in which case the tax cuts simply expire, our legislators can honestly say they didn't vote either for or against it, depending which way the wind blows, and you still up paying more taxes next year.
Now some of you progressives are still stuck up a couple paragraphs and are ready to argue the jobs creation point with me. Bring it on. I'm dying to hear your argument about how tax cuts for the poor create jobs - they start businesses, they hire more employees, they expand their current operation. Yeah, right. You know better. Certainly the poor are deserving of relief, but it's the rest of us who drive the economy - not the poor.
Maybe you got sucked into Joe Biden's recent semi-coherent rant that only 3% of small businesses actually qualify for the tax cut anyway. Or Nancy Pelosi's flip of that incorrect number to claim that the planned tax increases would exempt 97% of small businesses. In a classic case of 'figures lie and liars figure', they chose some selective statistics from the IRS to back their flawed supposition.
According to an article in today's Wall Street Journal, that 3% figure is predicated on raw data counting everybody who shows some business income on their Schedule C - including the millions of people simply making a few bucks off eBay or CraigsList. If you look at the returns for sole proprietorships, partnerships and S Corp's, which includes a lot of you, the number of households with incomes above $200,000 rises to 48% - a far different figure from the 3% Joe Biden would have you believe. Of course if they can foist that faulty argument on 97% of the people who think only the upper 3% will get smoked, they're golden. If the other 45% find out beforehand, then they're screwed even deeper into the quagmire come November.
If the tax rates are allowed to float up for 'the wealthiest', it would result in a decrease in gross receipts of more than 7% to sole proprietorships according to a study done by the National Bureau of Economic Research. 7%. On top of the declines in Realtor income the past 3 years because of the market, are you ready to eat another 7% loss just because our spend-happy administration needs more of YOUR money? And Realtors are doubly screwed because we can't even raise our prices. We're stuck.
In order for many small businesses to survive another cut in income, they will just try to raise prices for everybody else - medium and large businesses will do the same. Some will be successful, many will just sink under the waves. How many restaurants have gone under in your city the past couple years? If you have $923 less to spend next year, will you be going out to restaurants as much? The beauty parlor? Movies? Will that cause more people their jobs? Apparently Joe Biden thinks not.
So if you are blessed to have a liberal-progressive congressman in your neck of the woods, make sure you ask them which set of numbers they subscribe to - Joe Biden's or the real deal? A lot of them are feeling the squeeze right now and, fortunately many of them won't be returning next year. On BOTH sides of the divide, errr - aisle.
Well, if you're an average income Broker, I'm sure the government can spend your $923 better than you can anyway. And if you think politics and real estate don't mix, just go back into your stupor - this rant's not for you.
Keep on hoping for change people, it'll be here before you know it.
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