It was just last year that we wondered what was going on behind closed doors until the Christmas Eve vote was over and the nation had a health care plan. A bill that is 2,300 pages in length. A bill that most people in Congress did not read. A bill that few Americans understand but are fearful of. Now, we face another Christmas deadline that affects everyone: the extension of the tax cuts.
In spite of the results of last month's election and polls that show an overwhelming percentage of respondents believe it is in the nations best interest not to raise taxes for anyone, at least until the economy improves, the politicians don't seem to understand or respect the will of the people. The lame duck Congress must take action before the current tax rates expire on January 1, 2011.
Contrary to what some politicians say, there are no actual tax cuts. By not extending the current tax rate, we avoid reverting to the 2002 taxation level. The President has recently announced a compromise plan is in the works that calls for maintaining the existing tax levels for all Americans for another two years. It also includes a provision to extend unemployment for an additional year, among other things.
The sticking point has been over whether the higher earners, who already pay higher taxes, should be forced to pay even higher rates. Many believe this would adversely affect job creation, since many of these citizens are owners of small businesses. It is these small business operators who are responsible for much of the nation's new jobs.
If this agreement had not been reached, those in the upper income brackets would also have been hit with capital gains tax increases on top of the hikes on ordinary income. This could have resulted in a sizeable falloff in the stock market and have a direct influence on the value of investments held by Americans of all income levels.
New Seniors are often dependent on the financial markets to provide income, over and above Social Security, to help them through their retirement years. So another negative adjustment in the stock market could put retirees in the position of outliving their money, even though they planned and saved for the future long before the future looked so bleak.
Many economists say the government should move aside and allow the private sector to start generating jobs. This will happen only if businesses can plan ahead and see a potential return on their investments. The lower income and capital gains tax rates for investors should provide incentives to move forward.
It is up to Congress to take the necessary actions in December to set the stage so the next session can begin its work starting in January. Let's hope they keep their transactions in the open and not act like the "Grinch who stole Christmas" again this year. All they need to do is extend the tax rates and go home. That will be the best Christmas present for all Americans.
Don Potter, a Philadelphia native, was born in 1936 and is a 50 year veteran of the advertising agency business. Now living in Los Angeles, he has written two novels in retirement, frequently writes on marketing issues, and has a blog dedicated to pre-boomers (those born between 1930 and 1945).
Read more articles for and about pre-boomers with thoughts, comments and opinions designed to spark thinking, foster discussion, and stimulate debate by logging on to http://www.pre-boomermusings.com
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