Tax Cut Deal how it Affects you

With all eyes on Washington as the Senate and the House played out their antics as they argued over taxes and unemployment benefits, some Americans may wonder how it all affects them. Now that the President has signed off on the bill, making it law, now is the time to get the whole thing into perspective.

The 2010 election

As the realization that efforts to stimulate the economy have failed, Americans and politicians alike have signaled that they want something different to happen. In November 2010, Americans led by the so-called Tea Party patriots rejected the Obama agenda and sent dozens of career politicians from both parties packing.

Rather than unifying Congress, however, the election seems to have polarized it by taking moderates out of the picture. This polarization was perhaps intensified by lame duck politicians, bitter over the walking papers handed to them by constituents.

In short, the 2010 election had much to do with the attention fixed on the tax cut deal as it was debated in Congress.

What tax cut?

Media sympathetic to the Obama regime seem to have been complicit with it regarding the tax cut deal. Knowing that most Americans probably like the idea of a tax cut, the so-called “tax cut” deal was used to help sway public opinion in support of it.

Although many economists seem to understand that the path to stimulate the economy and increase revenue is to cut taxes, the Obama regime has gone two years raising taxes rather than reducing them. The reduction in government revenue caused by tax increases has combined with increased spending to hurl the nation toward full scale economic cataclysm.

The reality of the tax cut deal is that it does not cut taxes. For the most part, the “tax cut” deal continues tax rates as they are right now. Some taxes, most famously the estate tax, are actually increasing under the measure, setting up many people for disappointment in the Obama regime and both major political parties.

So, for most Americans, the “tax cut” deal means that their taxes will stay the same.

Where’s the beef?

Knowing that the “tax cut” deal has not cut taxes at all, but rather raised some while holding other steady has caused some Americans to question what the purpose of the law really is.

Even though tax cuts are widely understood to be the key to generating economic activity, few American politicians seem willing to actually cut taxes. Similarly, few American politicians seem willing to curtail government spending.

When searching for some sort of substantive implications of the “tax cut” deal, Amercans must be satisfied knowing that. for some, dying in 2011 will be more costly than dying in 2010 and that most other tax rates will stay at 2010 levels.

Without extending current tax rates, the ten year temporary tax cuts enacted during the Bush years would have lapsed, causing significant harm to American workers and to the American economy.

Unemployment benefits extension

The only other significant implication of the tax cut deal is that unemployment benefits were extended for an additional 13 months. This aspect of the bill has also been the subject of some misrepresentation.

Many conservative opponents of the bill appear willing to portray it as enabling the government to pay people not to work for almost three years. They say this based on the fact that unemployed workers currently draw benefits for up to 99 weeks, a duration that is five weeks short of two years. By supposing that adding thirteen months to the existing 99 weeks of benefits, some seek to mislead people into opposing the provision.

The truth about the unemployment benefit extension

Under the “tax cut” deal, the maximum term of unemployment benefits continues to be 99 weeks. No new “tiers” or additional weeks of benefits have been made available to the long term unemployed.

The unemployment benefits extension means only that the program is in effect for thirteen more months. This means that those who qualify for additional tiers of unemployment benefits can continue to apply for them for thirteen months.

One other thing: the federal stimulus money that added some cash to weekly unemployment payments was not renewed, meaning that most people drawing unemployment will see a reduction in their benefit checks.

The bottom line

The meaning of the tax cut deal to most Americans is this: disaster averted. Without the extension of unemployment benefits, many families would have met their demise in December 2010. Without the continuation of federal tax rates, American workers would have been faced with the largest increase in taxes in American history as rates returned to Clinton era levels.