What tax deal could mean for you
December 7th, 2010
12:07 PM ET

What tax deal could mean for you

The White House is working to get Democrats to support a last-minute deal on taxes that President Barack Obama hammered out with Republican leaders.

The compromise would extend the Bush-era tax cuts for two more years, keeping income tax rates at their current levels for everyone, as Republicans insisted. Obama and other Democrats wanted tax rates to rise only for individuals earning more than $200,000 a year and for families making $250,000 or more a year.

If the deal goes through, here's what it will mean for you:

Payroll taxes – Wage earners will have extra money in their paychecks with the lowering of the payroll tax from 6.2% to 4.2%. Someone earning $50,000 a year would pay $1,000 less in Social Security contributions next year. Someone earning $100,000 would pay $2,000 less. The payroll tax rate would go back up to 6.2% in 2012.

Income taxes - Not much to see here - at least in terms of your wallet. The compromise would extend the Bush-era tax cuts for two more years, which basically means the income tax rates will remain exactly the same for the next two years at their current levels for everyone.

White House fact sheet on agreement

Individual tax breaks - Low- and middle-income tax filers will see an increased value in credits for two years if they file for an earned income tax credit, the child credit or a revamped tax credit for college costs.

Unemployment benefits - The package would leave in place for 13 months the option to file for extended federal unemployment benefits. In some states, especially where job loss is extremely high, it can be up to 99 weeks.

Estate taxes - The estate tax exemption, which lapsed this year, would be would be set at $5 million and the top rate would be set at 35%.

CNNMoney.com: Tax cut deal and surprise stimulus - the cost

If a deal can't be reached:

Taxes will go up for everyone, since the current rates set under President George W. Bush expire automatically at the end of 2010. Democrats control both houses of Congress, but the Republicans will take control of the House of Representatives in January, and the Democratic majority in the Senate will be smaller than it is now.

The estate tax would return in 2011 with a $1 million exemption level and a top rate of 55%.

Post by:
Filed under: Finance • Taxes
soundoff (596 Responses)
  1. Joe Stalin

    Obama fiddled the republicans while washington burned. The sky is falling and chicken little is dead. Wake up and smell the coffee, not, the pot has burned up, the smell is burn not coffee. Get used to it. What is new from here on in is the long slide from tier 2 power to tier 4 power. USA has not been a tier 1 power since the 50s. Reading the posts here expalins it all. Americans are just basically a dumb people with little advanced education beyond middle school. What ever is sound bit to you by your various talking heads is passed off as true.

    December 7, 2010 at 1:14 pm | Report abuse |
  2. George

    What are you talking about you people? The Repukes compromising! They got everything they wanted, which is a tax break for millionaires! As long as they have that and war, they are happy!

    The left in this country is truly gone. Wait until the middle class is gone and nobody can afford to buy anything...

    December 7, 2010 at 1:16 pm | Report abuse |
  3. Joe Stalin

    Korean war = lost
    Vietnam war = lost
    Capitalism war = lost
    Iraq war = lost in 2009
    Afganistan war = lost in 2004
    usa = lost

    December 7, 2010 at 1:17 pm | Report abuse |
  4. jeanne

    2012

    December 7, 2010 at 1:17 pm | Report abuse |
    • Joe Stalin

      What do you have on right now? What type of clothes?

      December 7, 2010 at 1:20 pm | Report abuse |
  5. POD

    Flat tax 10%.....no deductions, no exemptions.....no forms, no tax lawyers, no tax lobbyists, no tax accountants, no IRS. Pay off the debt in 10 years and still have a boat load of money left over to fix whatever else is wrong in this country. 10% off everybodies top revenue line,gross wages, gross sales, gross investment income....whatever. Fill out a postcard, write a check and mail it to the US Treasury

    December 7, 2010 at 1:18 pm | Report abuse |
    • George

      I like this better:
      10% on income under 50,000
      15% income under 250,000
      25% income over 250,000

      December 7, 2010 at 1:26 pm | Report abuse |
    • Jeff, an Independent

      Fair Tax is even better.

      December 7, 2010 at 1:44 pm | Report abuse |
    • KOD

      @George – I'm sure you do like it better, but how is that fair ? Why should those making more than $50K have to pay a larger percentage of income – they're already going to be paying a much larger share !!! Be successful and be penalized??? Ridiculous !

      December 7, 2010 at 1:52 pm | Report abuse |
  6. Mark

    The lesson of both the Bush administration and the Obama administration is that America has become a Fascist state ruled by an unholy alliance of Darwinistic political and corporate power, driven by personal greed, and characterized by an absence of social ethics. The person who serves as President is little more than the country's Head of State. The Head of Government resides elsewhere, in assorted corporate headquarters and in the catacombs and back alleys of Washington's political power structure. Democracy in America has become little more than a periodic venting of pent up frustration, ideological fervor, and a lavish exercise in marketing. The outcome of elections has no impact on what happens, only on HOW it happens and who gets to play leading roles in the farce that American government has become.

    December 7, 2010 at 1:18 pm | Report abuse |
    • George

      Yeah what Mark said!

      December 7, 2010 at 1:30 pm | Report abuse |
  7. kevin cassidy

    People blame Obama, but this is what happens when you grow impatient and elect a pack of GOP clowns.

    December 7, 2010 at 1:19 pm | Report abuse |
  8. Wayne

    Glad to see the Pres is coming to his senses. We still need to cut spending....

    December 7, 2010 at 1:21 pm | Report abuse |
  9. Minnesota Mike

    Cassidy

    How can a minority of "GOP clowns" trump the dems majority in the Senate and House with a dem Pres?????

    December 7, 2010 at 1:21 pm | Report abuse |
    • JCarlos_Q

      because in a few short weeks Republicans will be the Majority !! Democrats are practically out the door, if the president doesn't work with these newly elected clowns our country will suffer more from it because they will block every effort he attempts to do anything. That is how Republicans can make these rediculus demands. I don't understand how so many people bought into their lies!! Anybody with a tiny bit of ecomic sense can see that these cuts were a bad deal, and yet this one of the ways Republicans gained majority? Goes to show how educated Republicans are. Thanks a lot.

      December 7, 2010 at 1:31 pm | Report abuse |
    • George

      How? Because the Dems have no spine and the Repukes know it!

      I am done with the Dem Party!

      I am joining the Green Party. I don't care if that throws away my vote. Hopefully enough people have the same common sense and we actually get a liberal in the White House.

      December 7, 2010 at 1:33 pm | Report abuse |
  10. Anthony

    It's clear that none of the people at CNN watch their own news because during the Black Friday weekend they interviewed store managers and EVERY one of the managers/store owners said that they were having their best year in the last four years and some stated that they had hired as many as 100 new employees. YET every time they mention the President's stimulus plans, they constantly say, It's clear to see that the Obama stimulus plans didn't work and these tax extensions for the rich are a much better plan. The stimulus plans got consumers buying again, got some people hired just as they were supposed to. The auto industry greatly benefited from the stimulus plans because they have almost paid back the money and that means that they are SELLING CARS and making money. CNN listen to your own stories before you speak.

    December 7, 2010 at 1:21 pm | Report abuse |
    • Joe Stalin

      go ƒuck yourself you deluded repug

      December 7, 2010 at 1:30 pm | Report abuse |
  11. ruck febublicans

    i dont understand how anyone could feel sorry for people who make 250k or more a year...sure they may work hard, but so do i and i dont make that much...that argument would mean that 98% of americans are lazy. anyone who thinks these tax breaks will work needs a history lesson of the reagan and both bush presidencies...there is a common theme to all of them, their economies sucked..if i made 250k a year and was going to get to keep 15k more a year, why the hell would i do anything but save it or spend it on anything other than a tv made in china? both of which don't help the economy

    December 7, 2010 at 1:22 pm | Report abuse |
  12. John

    I will not vote for Obama again in 2012, unless he is running against Mike "Huckleberry" or Sarah "Stupidity".

    December 7, 2010 at 1:22 pm | Report abuse |
  13. Holdupaminute

    Obama just saved me over $3 million dollars that I would have had to pay in taxes! Thanks man! I'll repay you by recommending to the the rest of my companies trustees that we move our plastics division overseas where we will save millions through cheap labor and lax pollution and safety standards! Then our stocks will rise, I'll make a huge bonus (that I won't have to pay taxes on – thanks again!) and our stock will rise a few points on wall street, which is all that really matters. Yee haw! It's not my fault, I worked HARD to get where I am today when my father handed down the company to me, so don't get mad at me! I have powerful Washington friends.

    December 7, 2010 at 1:23 pm | Report abuse |
    • Joe Stalin

      right on dude ~ way to go ~ I wish more would follow your lead
      I have been waiting for the US to fall and peeps like you are on my side

      December 7, 2010 at 1:32 pm | Report abuse |
  14. mmr

    oh – and this is not a tax break – it is block in a tax hike – for everyone. I am still figuring out why my neighbor is getting paid by the govt for not working – for the past 1.5 years.... he his having a blast fishing every day, while I work.

    December 7, 2010 at 1:23 pm | Report abuse |
  15. JCarlos_Q

    Republicans SUCK !
    If you all think this issue was created by Obama or Democrats. YOU ARE WRONG.
    It is typical for Republicans to blame everything on Democrats.
    If we think about the issue just a little bit we can clearly see that these tax cuts are a bad deal for America.
    But, those of you blaming the President and Democrats, did you know it has been the Republicans who are making this push? YES, Republicans stopped the previous version of this bill because they didn't believe the rich were getting enough tax cuts! It was the Republicans who would have denied the millions of jobless Americans an extension of unemployment benefits if the President wouldn't pass their version of the bill. So in order to get that aid to the unfortunate Americans our president was forced by Republicans to give more the the rich. How SELFISH and GREEDY can Republicans be?
    And to think, they will be dictating our country's decisions for the years to come. And to bring shame to insult, Republicans blame Democrats for this? I just want to say to all those who voted for Republicans in this past election, Great JOB. Thanks for giving more the those who need it less, and for taking away more from those who have less.

    December 7, 2010 at 1:23 pm | Report abuse |
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19