Taxpayer relief Act turns out to be a Politician Relief Act
This new-year gave a surprising kick start to America. An individual must be out of his world if one has not paid attention to the most talked about Fiscal cliff conciliation that is called “American Taxpayer Relief Act.” Though the irony here is, that the act should have been named as “GOP Politician Relief Act” because of the fact that it is being framed for giving a smoothening factor to the Republicans. The rationale behind passing this specific bill is that they are looking up for having more freedom and power to exercise in the subsequent round of fiscal discussions as the republicans are fearful for not to be held accountable for fiscal cliff mandated tax increase on the people of America.
The law gives an enduring repair to the federal tax code by preserving unending the Bush tax cut for an individual taxpayer which initially was a curse of progressive subsistence for an individual creating less than $400,000 which now proved to be better informed regarding this fiscal cliff deal. Along with this modification there is another amendment to the alternative minimum tax (AMT) limits will be now be in relation to the rising inflation in the country. The biggest tax related divergence linking the congressional Budget office’s continuing budget protuberance based on existing law and more practical “alternative scenario” which explains that congress will carry on its preceding fiscal policies like a temporary quick fix to the AMT.
The fact of the matter is that the congress is inviting a huge fiscal cost by introducing this specific law. By protecting the Bush tax rates for an individual creating less than $400,000 yearly will enhance the fiscal deficit by $762 billion in coming ten years down the line. The enduring quick fix to AMT will set an expenditure of $1.8 trillion over an identical time frame. The tax requirement of the American Taxpayer Relief Act will eventually boost up the fiscal deficit by $3.9 trillion in the next ten years. However the taxes are not dropping down. With this new set up the tax rate will enhance to 20 percent on dividends and capital earnings which will further enhance the cost and risk of investing in the private arena. The law focuses on increasing tax rates for individuals earning more than $400,000 but at the same time it is diluting the vital tax exemptions for individuals earning more than $250,000.
The law is relaxed about the larger picture of Fiscal health care spending which is the most crucial equipment to overcome the unrelenting fiscal deficits. The fiscal cliff deal ultimately increases the tax amount by $620 billion and diminishes spending by $15 billion in next ten years. This deal eventually increases the part of the federal tax burden which will be borne by the individuals earning high.
There is a strong need to rejuvenate the fiscal approach which could be done by restructuring entitlements and condensing spending. The legislation which focuses on raising the debt ceiling in return of realistic entitlement modification like increasing the Medicare retirement age and aligning the chained-CPI inflation index to social security schemes can prove to be a savior in the existing scenario.