Economists at the National Association of Home Builders analyzed the end of the tax cuts on home builders. Home builders are typically small businesses, 80% are “pass through” entities such as Subchapter S Corporations, Limited Liability Companies, Partnerships or Sole Proprietorship, meaning business income is applied to personal tax returns.
These economists stated that if the 2001 -2003 Tax Cuts, as well as recent payroll tax cuts are allowed to expire then there are “large consequences”. Specifically the “pass through” entities above will see tax rates rise from the bottom 10% to 15% and onward to top rates of 35% and 39.6%.
Capital Gains would rise from 15% to 20% while dividends go from 15% to ordinary income rates topping out at the above 39.6%.
To have a multi-generational business a top estate tax rate of 55% and an exemption falling to $1 million dollars would have to be overcome.
For the country at large the Congressional Budget Office estimates the “drag” on the economy on 2013 will be $560 billion resulting in the CBO growth forecast falling from 4.4% to 0.5%.
Returning is the marriage tax penalty and child tax credits fall from $1000 to $500 per child.
The mortgage interest deduction will be adjusted for income levels mostly against $250,000.
James Carville Democratic Political Strategist – It’s the economy stupid!
Anybody in government listening? Caring?