A statement released yesterday from The White House reveals that Democrats and Republicans have reached an agreement on exactly how to extend the tax cuts. While both sides agreed that tax cuts for the middle class were necessary to maintain economic stability, differing opinions on cutting tax for the wealthiest Americans surfaced.

Two Sides Compromise

Obama is of the persuasion that government should only extend tax cuts for the middle class. The GOP argues that tax cuts should be maintained for not only for the middle class, but for the wealthiest Americans as well. Obama explains his position below:

Now, there’s no doubt that the differences between the parties are real and they are profound.  Ever since I started running for this office I’ve said that we should only extend the tax cuts for the middle class.  These are the Americans who’ve taken the biggest hit not only from this recession but from nearly a decade of costs that have gone up while their paychecks have not.  It would be a grave injustice to let taxes increase for these Americans right now.  And it would deal a serious blow to our economic recovery.

Now, Republicans have a different view.  They believe that we should also make permanent the tax cuts for the wealthiest 2 percent of Americans.  I completely disagree with this.  A permanent extension of these tax cuts would cost us $700 billion at a time when we need to start focusing on bringing down our deficit.  And economists from all across the political spectrum agree that giving tax cuts to millionaires and billionaires does very little to actually grow our economy.

The Republicans are convinced that tax cuts should be equal in proportion across the board. Their argument is that the wealthy should not be punished for accruing cash and assets through hard work. While I agree with this, Obama does make a strong counterargument that extending tax cuts to the wealthy does not help with the federal deficit:

. . . I’m not about to add $700 billion to our deficit by allowing a permanent extension of the tax cuts for the wealthiest Americans.

Obama did, however, allow a temporary extension of the tax cuts for the wealthy in exchange for the ability to extend unemployment insurance and allow for tax cuts for small businesses:

And I won’t allow any extension of these tax cuts for the wealthy, even a temporary one, without also extending unemployment insurance for Americans who’ve lost their jobs or additional tax cuts for working families and small businesses — because if Republicans truly believe we shouldn’t raise taxes on anyone while our economy is still recovering from the recession, then surely we shouldn’t cut taxes for wealthy people while letting them rise on parents and students and small businesses.

Americans Need To Sacrifice Lavish Lifestyles

We’re at a time in our history where ideals can clash with reality. Ideally, we all would like to maintain the lifestyle we’ve all grown accustomed to: tax cuts, unemployment benefits, and general government assistance. But I’m afraid that none of these things can remain active in the long term. The fact of the matter is that our nation is in increasing debt. We owe, we owe, we owe.

While we have a good deal of control who we put in Washington, we have greater control of ourselves. It’s time that we stop expecting tax cuts, government assistance, and our President to save the day. It’s time we take control over our own lives and live responsibly.

Whether we like it or not, America will have to make many sacrifices to get governmental spending under control. We soon won’t be able to afford to pay for those who aren’t working. We soon won’t be able to carry the burdens of those who have even legitimately lost their jobs and need assistance. This is why I’ve dedicated myself to learning to be self-sufficent to the greatest extent possible. I’m refusing to believe that I can be successful in only one endeavor. Multiple streams of income are becoming more and more important.

Read More Details

For more information on the details of the extension of the tax cuts and other deals that were made, please read my friend Peter’s article at BibleMoneyMatters.com: Deal Reached Between President Obama And GOP On Extension Of Bush Tax Cuts.

What are your thoughts on the tax cuts or the ever increasing federal debt? Leave us a comment below!

John

John officially launched TheChristianDollar.com on January 1st, 2010 with the intention to provide an excellent financial resource for biblically-minded individuals and families. Influenced heavily by Dave Ramsey, John started researching how he might better handle his money and help others in the process. John enjoys reading, writing, playing with gadgets, and spending time with his wife Courtney.

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Tax time is nearly here. If you’re in a panic to get your taxes done, here are a few great articles to help you out. These tax articles have especially been a great help to me as I start my own business here at The Christian Dollar.

So, read these articles quickly and do your taxes before April 15th, you hear!?!?

1. First Quarter Estimated Tax Payment is Due on April 15th. Make Your Payment Now! – BibleMoneyMatters.com
2. 4 Tips to Avoid Stress This Tax Season – ChristianPF.com
3. Your Income Tax Refund: How to Manage it Wisely – ChristianPF.com

John

John officially launched TheChristianDollar.com on January 1st, 2010 with the intention to provide an excellent financial resource for biblically-minded individuals and families. Influenced heavily by Dave Ramsey, John started researching how he might better handle his money and help others in the process. John enjoys reading, writing, playing with gadgets, and spending time with his wife Courtney.

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I struggled for some time with whether to use a tax professional this year. We decided we’re going to use one though, and thought I’d share my perspective on when you should as well.

This past year we got married, and with marriage comes a lot of elements that can lead to overlooking tax deductions. We also started giving, which helps with a tax deduction. We are also relatively new homeowners, and with that comes a lot of perplexing tax advantages that I’m afraid I’d miss out on on my own.

Yes, tax software can catch many of these deductions and caveats, but software isn’t so good at answering questions. It’s always a good thing to have someone you can bounce questions off of, and who better when you’re doing your taxes than a tax professional?

Tax software is inexpensive, but if you’ve gone through some major life changes, it’s best to leave taxes up to the professional. Even if you feel slightly uncomfortable doing your taxes, try going to a tax professional. It’s better not to have to worry about having issues with the IRS.

If you’re single, don’t own a home, aren’t investing, and have had no major changes in the past year, you can probably get away with using some tax software. Otherwise, I advise using a professional.

Have you done your taxes yet for 2009? What did you pick? Have any riveting tax stories? Let us know in the comments! I’d love your input!

John

John officially launched TheChristianDollar.com on January 1st, 2010 with the intention to provide an excellent financial resource for biblically-minded individuals and families. Influenced heavily by Dave Ramsey, John started researching how he might better handle his money and help others in the process. John enjoys reading, writing, playing with gadgets, and spending time with his wife Courtney.

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Have you ever wondered how your tax money is being spent? Take a look at this resource to see exactly how your money is being spent by the federal government.

I was amazed that so much of our money is going towards Social Insecurity – uh, I mean, Social Security! One category I think is absolutely necessary is national defense. What are your thoughts on this breakdown of your dollars? Do you think the government is doing a good job? I’ll meet you in the comments.

John

John officially launched TheChristianDollar.com on January 1st, 2010 with the intention to provide an excellent financial resource for biblically-minded individuals and families. Influenced heavily by Dave Ramsey, John started researching how he might better handle his money and help others in the process. John enjoys reading, writing, playing with gadgets, and spending time with his wife Courtney.

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