By the Numbers

Better stated, the average amount of money that a Bush Cabinet member will be able to REINVEST this year due to cuts in capital-gains and dividend taxes.

Incidentally, a married couple filing jointly with a taxable income of $52,000 SAVED $739 in 2003 as compared to 2002 due to changes in taxable income rates. These rates helped everyone, not just the rich as is widely reported inaccurately.
The old rates for 2002 were as follows:

$0 - $12,000 taxed at 10%
$12,001 - $46,700 taxed at 15%
$46,701 - $112,850 taxed at 27%
$112,851 - $171,950 taxed at 30%
$171,951 - $307,050 taxed at 35%
Over $307,050 taxed at 38.6%

The new rates for 2003 were as follows:

$0 - $14,000 taxed at 10%
$14,001 - $56,800 taxed at 15%
$56,801 - $114,650 taxed at 25%
$114,651 - $174,700 taxed at 28%
$174,701 - $311,950 taxed at 33%
Over $311,950 taxed at 35%

2001 had no tax rate of 10% instead having the lowest rate at 15%. 2002 added this rate and reduced every rate by 0.5%. Our couple mentioned above would have saved even more from 2001 to 2002.

These changes in the rates do not include the vast number of benefits in credits and deductions afforded to all individuals and especially businesses in all tax brackets.

After 9/11 a Special Deprciation Allowance allowed businesses to deduct an addtional 30% of the depreciable basis in the first year of use. This is HUGE for all sizes of businesses allowing to purchase capital they may not have been able to afford to do.

For example, suppose I had a small pizza restaurant and desperately needed a new oven since the current one had too many hot spots, consumed to much energy, took 20% longer time to cook a pizza, and required costly maintenance and repairs. With the new SPA, I would be able to justify purchasing a newer, environmentally friendly, faster, and required significantly less maintenance and repairs. If this new unit cost $50,000, I would able to deduct $15,000 immediately the first year which helps me tremendously offset the payments on the new oven.

My customers are happier that their pizzas are more evenly cooked and done more quickly. The environment is better off since I am using less energy which further reduces my stress level since I'm not paying so much run the old dinosaur. I start to make more money which means I can open another store on the other side of town. I'll have to hire more people to run that other store since I can't be in two places at once. More people working is less unemployment which leads to more taxpayers and more commerce... I could go on but essentially everyone wins in this scenario except for the guy keeping this costly beast working. Maybe I'll hire him to be the manager of my new store. ;)

Being single, with just my mortgage, state tax and property taxes as deductions, I had to pay the alterative minimum tax on an income of around $68,000. And the mortgage interest was only $5,300, while the state tax was $3,400, and the property tax was $5,500. Those deductions exceeded the minimum alterative tax limit for a single person. So, I donít see any savings in Mr. Bushís glorious tax cut.

You, too, can enjoy tax cuts and keep more money in your pocket at tax time if your tax strategy starts with avoiding the dreaded AMT. With your income and marital status, you especially should seriously consider utilizing more tax shelters to reduce your tax burden.

I would suggest investing in inexpensive single-family homes to rent in your area. These have been tremendous tax shelters for our family (both when I was single and later married) and can produce sizeable depreciation deductions at tax time. Even if you do not wish to manage the property yourself, you can still find properties with positive cashflow and pay a professional management company 10% of gross monthly receipts.

Real estate is but one tool but there are many other tax shelters that may be more appropriate for you. Read as much as you can on the subject to find the best way for your lifestyle. It's very easy for anyone to manage their deductions and pay very little on April 15 provided they have the right many and kind of shelters.

Good luck.

Dave, for the past two years I have been in an income bracket where my tax rate has not changed. Therefore, I don't understand your comment: "These rates helped everyone, not just the rich as is widely reported inaccurately." Please help point out how the reduction in taxes to the rich benefit households in the two lowest income brackets - and I am not interested in a lecture on trickle down economics.

Bottom line is the tax burden for the lower two income brackets hasn't changed, therefore the tax burden for struggling lower income households has NOT help everyone. How would a family of 4 with a household income of $20,000 per year use a $739 refund (which they would never see because the government's priority is to give tax breaks to the rich who don't need them as much as the poor starving people in this country)? They would probably spend it on food and clothes for their family or maybe to fix their truck so they can get to work and not on a family vacation to the Bahamas or a new home computer.

When you live in the privileged house, the tax breaks are wonderful for America. When you live in the poor house, tax breaks for the rich cause animosity and mistrust in the leadership of our government.

In September 2001, Kerry Said We Should Not Raise Taxes In An Economic Downturn. "The first priority is the economy of our nation. And when you have a downturn in the economy(as Kerry claims), the last thing you do is raise taxes or cut spending. We shouldn't do either. We need to maintain a course that hopefully will stimulate the economy. . . . No, we should not raise taxes, but we have to put everything on the table to take a look at why we have this structural problem today. . . . you don't want to raise taxes." (NBC's "Meet The Press," September 2, 2001

P.S. Ford, we know how much money your family has so not sure why you are playing the pauper in this scenario. Your rhetoric is tanamount to sociali'sm. Unfortunate.

http://discussions.pbs.org/viewtopic.pbs?t=28529