Newman: Tax Increases Need To Be Phased In

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That's move on to taxes shall -- if congress does not act the US faces that so called fiscal cliff January 1 2013 so there's the question.

If the bush tax cuts expire out what happens to your tax bill and all the other tax break when they expire.

Rick Newman from US news and world report is he I want -- -- which tax increase if it hits will affect the most people go.

It depends on who wins in November what congress does at the end of the year obviously but.

A lot there's that little payroll tax deduction that has been in place for almost two years now that's supposed to expire in effect if any of these tax cuts actually do expire I think there's a good chance that will be want that will be the -- -- that would affect that -- every ME group withholding goes from four point 2% which is the reduced rate back to the normal rate which is six point 2% for somebody earning fifty.

Thousand dollars at eighty bucks a month a lot of people pooh poohed that when it passed -- what that kind of difference is that gonna make a guess what.

When suddenly you're losing eighty bucks a month instead of getting it's gonna seem like a -- of people it's going to be a big problem.

-- also right in saying that on January the first all tax rate as in all the bush tax rate cops they go away.

So all tax rates go off is that accurate that's correct they go -- unless congress does something about it which people sort of assume congress will.

But people are now saying you know don't take that for granted because it's getting a little difficult to see tactically how this happened so if those tax rates go up for the ordinary person.

Your tax rate we'll go by about three percentage points nobody has prepared for this nobody has put aside you know 3%.

An extra 3% of their income just in case congress completely screws this up at the end of the year so they're gonna have to do something but we're we're seeing now -- it looks like those -- all expire taxes go up and we wait for the next congress next president to come in and then they'll deal with that then I guess that's a chaotic situation is that and it's not just income taxes what about -- -- -- tax on capital gains dividend and interest rate a lot of that a result those go back to the rates prior to the 20012003.

Tax -- a lot of those things -- be so just be treated as income so.

Dividends instead of being taxed at 50% up I think it's to the 39 point 6% that the big hike on dividends not be a disaster scenario for the stock markets.

It's that you know -- Stewart you've had a lot of -- want taxes are gonna have to go up sooner or later but the worst possible way to do it.

Is at the last second when no ones no -- prepared for at these things if these happen they need to be phased in over a long period of time -- -- -- it's coming.

I did hear a leading Democrats else wanna.

This morning say yes let's go over the fiscal -- let's deal with the deficit by raising taxes for everybody and massive cuts in spending on the military but it just in favor of Britain none of this adds up raising totals as.

Doesn't do enough to do to reduce our debt and get our economy known why don't they listen that he doesn't do it it doesn't get the economy going.

Now happened and also to raise taxes to the -- it.

I don't know how many hundred Italy on the problem is that's a political tactic that is that is economically stupid yeah he's don't want no one is thinking about the economics of this except it everybody who runs a business of sitting back and see attitude -- -- -- these guys yet how and are they gonna trash the economy before they start do something sensible.

Yes it is a tax revenues create some kind of magic beans in the economy so jobs.

But the issue is is replaying the Clinton and the Reagan movie in reverse what do you see in the lame duck that could be addressed in terms of political horse trading.

-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- And he we will have -- -- chaotic situation like we had last summer with the debt ceiling fiasco which pushed the stock market down.

For three months correct basically stalled the economy in place an incredibly.

And it is already just all -- -- so we are already feeling the effects of this -- some Washington.

About twenty seconds you -- you have got a statistic about walked taxis paid by the top 20% of in kimonos government.

Top 20%.

Pay.

50% since we make 50% of all the income in this country and pay 70%.

Of all the federal income taxes.

What -- what would one side is saying is what the -- -- it's the share.

They are paying incredible amount of the share of all the federal income tax top 20% of income on his -- 74% of all tax we think that these are those who weren't 74000 dollars or more that's it.

Rate paid nearly 70% of all federal income taxes not the 250000.

Not to 200000 but those who -- 74000 dollars or more peace 70% of all the federal income taxes and you tell me is that fair.

That's question -- ended -- I think written human thank you very much an editor hope you're wrong.

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Newman: Tax Increases Need To Be Phased In

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