The pressure is on in Washington. We are two weeks away from the deadline given by Tim Geither for the lawmakers to reach an agreement before the United States surpasses the debt ceiling and sends the country into unprecedented territory.
If an agreement is not met, the United States would be unable to pay its bills.
The Democrats are fighting to solve the crisis with a deal that would raise taxes (increase the income) to maintain elevated spending levels.
Republicans are fighting to keep taxes low, a pro-business model, and to cut spending.
The political positioning is childish, ridiculous, and a global embarrassment.
Both parties are concerned with positioning themselves to gain control of the White House in November 2012. Control over the White House is meaningless when you spend your time being concerned about the next election instead of finding solutions to current problems.
The Washington Times posted an article that references the 1990 deal and how compromising can lead to political disaster.
"We found ourselves in a similar situation 21 years ago...negotiators reached agreement on a budget pact that raised taxes and assured there would be lower spending, ultimately reducing deficits. This agreement was hailed as the 'deal of the century." The $165 billion in new taxes rushed right through Congress, but the agreed-upon spending cuts were quickly ignored.
"Federal outlays accelerated so far beyond the amount of new revenue that by 1992 the annual budget deficit had more than doubled. Feeding the beast with new taxes had only made matters worse and by 1993 the government found itself up against the debt ceiling once again. The 'deal of the century' was dead."
What does this mean for your tax situation?
Although, we don't expect that laws will pass immediately, we do anticipate that you will need to put together a proactive tax strategy. As the political leaders seek a compromise that will solve this situation, we plan on helping our clients protect their financial situation as much as legally possible. Schedule some time to meet with a local Liberty Income Tax professional
Disclaimer: Every effort has been taken to provide the most accurate and honest analysis of the tax information provided in this blog. Please use your discretion before making any decisions based on the information provided. This blog is not intended to be a substitute for seeking professional tax advice based on your individual needs.