NetNews Usenet Archive 1992 #27/NN_1992_27.iso/spool/alt/rushlim/10311

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From: [e-mail] (EMIL CHUCK)
Newsgroups: alt.rush-limbaugh,alt.politics.elections,talk.politics.misc
Subject: Re: Just how safe IS the middle class?
Message-ID: <[e-mail]>
Date: 23 Nov 92 21:02:12 GMT
References: <[e-mail]>
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Organization: Duke University; Durham, N.C.
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Forwarded post:
NOTE>  Posted at the request of [e-mail]
NOTE>  who mailed me that "I am unable to post
NOTE>  right now due to news server problems." If ya want to
NOTE>  send email, send to [e-mail]

This is ALL his post -- not mine.

/****************  Cut here *****************/

This article is in the December, 1992, issue of "Money."

It is transcribed here without permission, and I have omitted the
"what to do" information regarding the specifics, and have noted where
the omissions occur.

--------------------------------------------------------------------------
    "How President Clinton Will Change Your Taxes"
            by Teresa Tritch

    Just as soon as he takes office on Jan. 20, President-elect Bill
Clinton promises to launch an F.D.R-style First Hundred Days, marked by a
blaze of legislation that will leave no doubt that the Republican era of
cut-your-tax tactics has ended with a vengeance.  Clinton's four-year plan
calls for some $220 billion in spending, including $80 billion for public
works and $60 billion for job training and education.  Moreover, as he
repeatedly declared during the campaign, he intends to slash the deficit--
estimated at $327 billion this fiscal year--in half by 1996.
    To pay for all this, Clinton has pledged $140 billion in spending
cuts, primarily aimed at defense and the federal bureaucracy, as well as
$150 billion in tax hikes, mostly on the rich ($90 billion) and U.S. and
foreign corporations ($60 billion).  But--the big, big, BUT--both conservative
and liberal analysts say that at least half of his spending cuts are sham
wishes and cavalier dreams, to paraphrase Robin Leach.  For example, the
$45 billion Clinton expects to squeeze from foreign corporations may crunch
down to a mere $1 billion, according to calculations by Congress' Joint
Tax Committee.  Moreover, all that analysts know for sure about Clinton's
plan for universal health coverage is that the spending involved could
dwarf most of his other programs.  The glaring gap between the taxes coming
in and the money going out will have to be filled by someone, and guess
who'll get the hit?  Yes, despite Clinton's avowed intentions to tap only the
1% of all taxpayers making $150,000 or more, you're a likely target if you're
married and earn $80,000 or more, or single and make above $50,000.
    This conclusion is drawn from an extensive analysis of Clinton's
economic plan and interviews with 25 economists, tax experts, policy analysts
and congressional staffers.  Our judgement rests on two assumptions:
    First, Clinton is serious about both his spending and deficit-
shrinking plans.  In the campaign's closing weeks, he promised to "cut other
government spending or slow down the phase-in of the programs" if the
money he expects does not materialize.  But he never said he would back off
his agenda entirely.  And second, he will keep his pledge not to raise taxes
on the middle class.  However, he left himself wiggle room by never defining
"middle class."  The closest he came to it was in his proposal for a "middle-
class tax cut."  Even then he said only that the cut would apply to couples
with less than $80,000 in adjusted gross income (AGI).  Between that income
level and the thresholds for his tax-the-rich hikes ($200,000 for couples
and $150,000 for singles) grazes the cash cow that could be milked to feed
his ambitions:  the upper middle class.
    To keep from crippling the crawling economy, the Clinton tax measures
will probably take effect in stages.  For openers, the new President will
undoubtedly make good on his campaign pledge to slap a 10% surcharge on
people making $1 million a year in addition to hiking the top federal income
tax rate from 31% to 36% on couples with adjusted gross income above $200,000
and individuals making more than $150,000.  In all, however, fewer than a
million taxpayers out of 114 million earn enough to be affected.  Then, once
the risk of renewed recession recedes, experts say Clinton will be compelled
to extend his tax increases well below those cutoffs.  Among his probable
means:  a rate hike; tightening deductions; and extending taxes on Social
Security benefits.  Capital gains on assets held at least one year will
continue to be taxed at 28%.
    At the same time, taxpayers making as much as $80,000 who fit
Clinton's definition of middle class will have a long wait for the tax cuts
he promised:  $300 per child or $200 for childless couples and $150 for
singles.  That's because those breaks would cost about $60 billion over
four years.  "There's a good chance he'll say he simply can't afford a tax
cut now but will look into it later," says Lawrence Chimerine, a senior
economic counselor at DRI/McGraw-Hill in Lexington, Mass.
    Barring an economic miracle or an unexpected retreat, the Clinton
Presidency will bring a range of specific tax changes.  The most important
ones are outlined below, along with advice from tax pros on what you can
do now to ease the coming bite.

o ALTERNATIVE MINIMUM TAX
    As the second leg of his tax-the-rich plan, Clinton promised to boost
the AMT rate from 24% to 26% or 27%.  Watch out!  "The AMT is a real sleeper,"
says David Berenson, national director of tax policy at Ernst & Young in
Washington, D.C.  "It could catch a lot of taxpayers who make well under
$200,000."  Congress enacted this whammy in 1979 to force people who were
taking big write-offs to pay at least some tax.  Since then, however,
Congress has twice craftily raised the AMT while dropping the top regular
rate.  Reason:  In general, as the spread narrows between your normal top
rate and the AMT rate, you're more likely to be snared by the AMT--for
example, if you exercise hefty incentive stock options or if you take
disproportionately large write-offs for state and local taxes or for home-
equity-loan interest.

[what-to-do omitted]

o DEDUCTIONS
    Taxpayers with income in even the low six figures will continue to
lose some of their deductions.  Currently, the total of most of your
itemized write-offs is reduced by $30 for every $1000 of AGI above $105,250;
similarly, your exemptions--$2300 each for yourself, your spouse, and any
dependents in 1992--begin to phase out as AGIs exceed $157,900 if married,
$105,250 if single.  Those provisions, scheduled to expire in 1996 and 1997,
respectively, seem likely to be extended permanently and perhaps even
augmented.
    If you earn less than $100,000, your deductions look safe--unless
the deficit balloons further and Clinton feels forced to react.  In that
case, tax experts think his likeliest target would be your deduction for
home mortgage interest.  Together with Congress, he would consider these
three main options:  Reduce the $1 million cap on mortgages for which
interest is deductible; eliminate the interest deduction for mortgages on
second homes; or lower the $100,000 cap on home-equity debt for which
interest is deductible.

[what-to-do omitted]

o RETIREMENT PLANS
    Chances are excellent that Individual Retirement Accounts will be
liberalized next year at the urging of Texas' Lloyd Bentsen, one of the
Senate's most powerful Democrats.  Bentsen got Congress to include IRA-
enhancing measures in the tax bill that President Bush was expected to
veto in early November.  President Clinton will be inclined to grant
Bentsen his wish, in return for support of his own tax proposals.
    The most likely 1993-94 IRA reforms would spur spending to help
the economy without bloating the deficit immediately.  They include
allowing penalty-free withdrawls for new-home purchases, college costs,
major medical bills and expenses while you're unemployed.  You'll probably
also be offered a so-called back-end IRA.  With these accounts, your
contributions won't be deductible, but you can withdraw the earnings tax-
free after only five years.
    However, you'll probably have to wait until 1995 or '96 for the
heart of Bentsen's plan to become law:  a fully deductible IRA for couples
with AGIs as high as $100,000 and singles as much as $75,000.

[what-to-do omitted]

o SOCIAL SECURITY AND MEDICARE
    Like any politician, Clinton will approach these so-called entitle-
ments very carefully.  Nonetheless, he'll probably press early for his plan
to require retirees who make more than $125,000 to pay higher premiums for
coverage of doctors' bills under Medicare; under current law the government
will pay $109.80 of the monthly premium in 1993, and a retiree will pay
$36.60 regardless of income.
    In addition, during the last debate Clinton seemed inclined to raise
taxes on well-off Social Security recipients too.  "Should people pay more
for Medicare if they can?" he asked rhetorically.  His answer:  "Yes.
Should they pay more for Social Security if they get more out of it than
they paid in... [and] they're upper-income people?  Yes."  Currently, up
to 50% of benefits are taxed for those whose income exceeds $32,000 if
married or $25,000 if single.  Taking 85% of such benefits, as Ross Perot
proposed, might be the outer limit.

o THE SELF-EMPLOYED
    Chances are, Congress will agree to Clinton's proposal for an
investment tax credit, which might equal about 10% of the purchase price
of new business equipment, such as a computer, car or truck.  The self-
employed are also likely to get a deduction for their health insurance
premiums, though no one knows whether Clinton's proposal to allow a 100%
write-off will win out over Congress' 25% limit.

[what-to-do omitted]

o TAX-FAVORED INVESTING
    Clinton aides have pledged that he will not tamper with municipal
bonds' tax-free status.  He is also expected to favor extending the tax
credit for investments in low-income housing for one year.

[what-to-do omitted]

-------------------------------------------------------
From: [e-mail] (Milamber)
-------------------------------------------------------
--
Emil Thomas Chuck    [e-mail]    Biomedical Engineering 1993
    Hope you have a very good "Native American Exploitation" Day.
I don't have to have a 4.0 GPA to succeed in life because I'm
good enough, I'm smart enough, and doggone it, people like me.