As featured in The Wall Street Journal, Money Magazine, and more!

President Obama’s 2011 Tax Plan

This article was written by in Taxes. 9 comments.

President Obama offered a framework for the tax-related aspects of spurring the economy moving forward. The foundation of the proposal, which conflicts with a bill that has already passed the Democrat-controlled House of Representatives, is the full extension of the Bush-era tax cuts, even for the wealthiest taxpayers.

The proposal also calls for an extension to unemployment benefits for another thirteen months and a consolation to Republicans who wanted more favorable tax treatment for estates.

None of this proposal is automatic. Congress must still form bills based on this proposal, pass the bills through a vote, and send a compromise bill to the president to sign. All along the way, there will be more compromises. The new laws affect taxes for 2011 income, so there is enough time for more partisan debate to shape a bipartisan law before taxpayers will owe their final tax bill for the year in April 2012 (or October with an extension).

For those who need to plan for 2011 taxes ahead of time, particularly small business owners, it would be better to know the results as soon as possible.

Is Obama conceding to Republican pressure too early or is this plan the right move to boost the economy?

Updated January 17, 2011 and originally published December 6, 2010. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

Email Email Print Print
About the author

Luke Landes is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

{ 9 comments… read them below or add one }

avatar HenryTalksMoney

Man, who’s paying for all this?

Reply to this comment

avatar D. Brinson

This is just amazingly stupid. The same week that the deficit reduction committee publishes its plan, Congress and the President plot to add TRILLIONS to the deficit.

Reply to this comment

avatar Tristan

I gotta be honest, I really don’t want my taxes raised unless I know they are going to pay off our DEBT. If they are raised for any other reason, it is for some unnecessary spending that I’d rather have China pay for (ha).

But really, as you have mentioned before Flexo, there are plenty of super-rich people out there aware that their contribution to Washington’s play money is not great enough… so I (surprising myself) would have gone with the Dems on this one: keep taxes the same for everybody except for the higher income earners until some better plan is thought up in another 7 or 9 years.

Reply to this comment

avatar Conservative Sense

Thank goodness the bone-headed president has finally decided to work with Republicans. These tax cuts need to be permanent, but an extension is ok for now.

I’m afraid that with the unemployment benefits extension in there as well that this will not boost the economy. (People will still sit at home making $10.00/hour rather than get a job that pays them $11.00) Of course, Obama wants the economy to stay in the tank since that is his only hope at re-election.

If the economy turns around after the GOP takes office, Obama will have nothing to run on. If it stays in the tank, he can try to blame Republicans for not letting him pass his programs.

Instead of raising taxes, cut spending. There is no way government jobs should pay more than the private sector, since it is the private sector paying those government wages.

Reply to this comment

avatar Apex

You apparently don’t understand presidential historical precedent very well.

If you think the economy staying the tank is good for Obama I don’t know what planet you live on. Republicans taking over 1 house of Congress, with Pelosi, Reid and Obama still being there and in charge of the white house and senate? If the economy stays in the tank Obama will lose in an election that Parallels the Reagan landslide.

Obama’s only chance is to get the economy improving and for people to see that things are getting better. I actually don’t think the President (any President) has much affect on the economy. But the people look to the President as their leader and if things are not going well he is going to take the blame. Period.

See 1980 (Carter), 1992 (Bush I) for instances of bad economies booting a sitting 1 term president.

Also see 1984 (Reagan), 1996 (Clinton), 2004 (Bush II) for improving economies causing the sitting president to get re-elected even despite other controversial items (1996 after the electorate was upset with Clintons first two years and booted both houses of congress in disgust very similiar to 2010), and 2004 with the Iraq war becoming controversial and not going well after it was promised to be short and decisive and Mission Accomplished was prematurely declared. Obviously many things factor into elections and economy is not the only thing but economy is a huge component and I assure you that any president who wants to be re-elected wants an improving economy. Reagan’s famous words in 1984 – “Ask yourself this one question, are you better off than were 4 years ago” Any president who has a majority of people answering no to that question is in BIG trouble.

Your conclusion about what would be good for Obama economically is just very weird and very wrong.

Reply to this comment

avatar Rassah

Government jobs paying more than private sector = MYTH
In short, government jobs mostly consist of higher-level managerial, financial, and office-type jobs, which pay about the same as similar private-sector jobs. The comparison that showed government jobs pay more than private sector was comparing a job block full of office administrative jobs to a job block full of minimum-wage McJobs and low-level service jobs, which are jobs that used to be part of government, too, until they got outsourced.

When I was on unemployment back in 2001, I got a check for $960/month. $960 / 160hours in a month = $6 an hour, NOT $10. And this is after losing a $23/hour job.

As for cutting spending, there are really only THREE things that can be cut to put any sort of dent in the deficit: Medicare, Social Security, and Military. Everything else is just a tiny fraction of what we spend on those. Democrats don’t want to cut the first two, and Republicans don’t want to cut the last one. Only other option is raise taxes.

Reply to this comment

avatar Peter Anderson

I’ll be happy if the tax cuts are extended, although I’d be even happier if they were accompanied by drastic budget cuts, even like some of the austerity measures that European countries are now having to take after years of big government handouts. We’ll see if congressional democrats go along with this deal, however.

Reply to this comment

avatar Rassah

I wonder if Obama is prematurely shooting himself in the foot by extending these higher-income tax levels by two years. Two years from now he’ll be up for reelection, and I’m pretty sure his opponent will be running on extending these tax cuts yet again, while Obama will have to stick with letting them expire, and the rest of the nation will likely forget about the whole deficit problem.

Reply to this comment

avatar Taylor

I have to say, I’m not thrilled with this plan. Provided that Obama is going to tax people who are making $250,000 or more a year. Trust me, that’s the equivalent of middle class in this society. I know plenty of people who make that much and are barely making ends meet.
My father is a Chiropractor in NJ and told me he’s upset about the plan because he makes that much a year (or a little less now because of Obama’s stupid Meda-Care plan).
Still, what I’m saying is that they should tax those who are at least making a solid million a year, if not half a million.
People making 250,000 a year can’t pay this extra tax. I know my family personally can’t. There’s 2 colleges we still have to pay for, 2 more colleges we’re going to have to pay for in a year or two, my brothers Medical school tuition, taxes from my dad’s office, taxes at home. It all adds up veryyyyyy quickly. To live in our township in NJ is costing $12,500 a year! And that’s just to live in the TOWNSHIP!
There are soooooo many things to pay for, I can’t even conceive why Obama wouldn’t choose a tax for the actually RICH people.
I hate this President so much. That “Yes We Can” changed to “Well, no we can’t”

Reply to this comment

Leave a Comment

Note: Use your name or a unique handle, not the name of a website or business. No deep links or business URLs are allowed. Spam, including promotional linking to a company website, will be deleted. By submitting your comment you are agreeing to these terms and conditions.

Notify me of followup comments via e-mail. You can also subscribe without commenting.