Merry TAX-mas

The "Fiscal Cliff" is 28 days away and the House Republicans are presumably painted in a corner by the President and the Democrats.  It is "reality news TV" playing out sound bite by sound bite.  A ridiculous public display of amateur negotiations and negotiators.   A stalemate based on a single issue -- TAX RATES on Incomes over $250K.

If you look carefully at the tax tables you will quickly see that this is not a fight about INCOME TAX RATES - it is really a fight about CAPITAL GAINS and DIVIDEND TAX RATES.

Look at the tables:

Individual Income Tax Rates

Tax Brackets (2012 Dollar Amounts)				Marginal Rate
Unmarried Filers		Married Joint Filers
Over	But Not Over	Over	But Not Over	2012	2013
$0	$8,700	$0	$17,400	10%	15%
8,700	35,350	17,400	70,700*	15%	15%
35,350	85,650	70,700*	142,700	25%	28%
85,650	178,650	142,700	217,450	28%	31%
178,650	388,350	217,450	388,350	33%	36%
388,350	…	388,350	…	35%	39.6%

Long-Term Capital Gain Rates

Maximum Rates	2012	2013	2013 (including Medicare contribution tax)
Long-Term Capital Gain	15%	20%	23.8%
Qualified 5-Year Capital Gain	15%	18%	21.8%

Dividend Income Rates

Maximum Rates	2012	2013	2013 (including Medicare contribution tax)
Qualified Dividend Income	15%	39.6%	43.4%
Ordinary Dividend Income	35%	39.6%	43.4%

Notice that the INCOME TAX RATE changes are nominal. The Married Joint Filers from $17,400 - $70,700 INCOME TAX RATE DOESN'T  EVEN CHANGE!!!!!!  regardless of what is done. The other brackets are up only 3% - 5%.

But look at the CAPITAL GAINS and DIVIDEND TAX RATES -  up 8.8% - 28.4%!!!

So the Republicans and Democrats waste time talking about spending, debt ceilings, medicare, social security, growth, jobs when the "show stopping" negotiating issue is Unearned Income Tax Rate.

It's time to state the obvious!  What will Santa deliver on Tax-mas?

Addendum:   Just a clarification -  My observation about no change is on the rate in the $17K-$70K bracket - not the total taxes on income.  Rates are at the margin but everyone pays the  5% increase for the first  bracket  $0 to $17,400 - or $870.  So if you made (married filing joint) $70,700 and the Bush tax rates expire then your taxes would increase 1.2% or less than $2.50/day - just over the cost of a large coffee.