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What Does the Fiscal Cliff Deal Do to My Taxes?

Brandon Moseley

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By Brandon Moseley
Alabama Political Reporter

Most people who supported President Obama also supported his war on the high achievers in this country.  Polls showed consistently that his war on “millionaires and billionaires” played well with the voting public.  Of course in the real world you can’t expand government entirely on the backs of the “millionaires and billionaires” and the billions in new taxes that were passed by both Houses of Congress in the fiscal cliff deal will hit almost everyone in the country.

An estimated 77% of households in this country just got a tax increase.  Granted it is a better deal for most than going over the fiscal cliff would have been, but higher taxes will mean strained budgets and some households (whether they know it yet or not) will be pushed into bankruptcy and foreclosure due (in part) to the massive tax increase that was passed by the Senate on Monday and the House on Tuesday.

Most significant for most Americans is that the Social Security Tax Holiday that President Obama passed in his first term was allowed to sunset.  That is a 2% tax increase for low and middle wage earners and cumulatively it is a massive tax increase on the American people.  The 2013 FICA limit is $113,700 so if you make $113,700 or more your FICA tax increase was $2274, but even that part time guy at the burger place who just makes $10,000 a year and doesn’t make enough to pay federal income taxes can expect to pay $200 more in FICA taxes.

It is our understanding at press time that individuals who make more than $200,000 or $250,000 for a household will no longer be able to itemize their deductions.  For higher earners there will no longer be a tax benefit for carrying a mortgage on a big new house or donating to their Church or favorite charity this year.

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In addition to the fiscal cliff deal, Obamacare starts to go into effect in 2013.

Individuals who make more than $200,000 filing individually or ($250,000) as a household will now get hit with a new 3.8% surtax on their capital gains, dividend, derivatives, and commodity trading income.   Under certain cases this would also apply to income in annuities and trusts and as of press time we are unsure as to whether or not it applies to rental income.

The 159 pages of new rules for just this section of Obamacare won’t be finalized until April.  Then we will have to adjust our understanding of them as tax courts make rulings on real world cases.  This new surtax will be calculated based on the MAGI (Modified Adjusted Gross Income number (line 37 on the 1040) NOT the classic taxable income number on (line 43 of a 1040).

Of course if you are in that $200,000+ for an individual or $250,000 for a household income tax bracket your Medicare payroll tax will jump from 2.9% to 3.8% starting this year and unlike FICA that does not ever cap out.

President Obama delivered on his campaign promise to make the rich pay more in taxes with his fiscal cliff deal.  Americans who make more than $400,000 in 2013 will see their income tax rate jump from a 2012 rate of 35% to a new rate of 39.6%. For joint return filers that threshold would be $450,000. The deal also raises that estate tax rate from 35% to 40%, but would keep the current estate tax threshold of $five million.

Of course the Senate still not passed any budget in over three years and the fiscal cliff deal did little to address sequestration, tax reform, entitlement reform, or balance the budget so it is very likely that more taxes will be raised through either higher rates or fewer deductions and tax credits in future legislation.

These rules are very very new are still in the process of being written in their final form and our understanding of all of them is still very limited.  For actual tax planning or estate planning advice please consult with your financial advisor, CPA, tax preparer, or money coach.

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Elections

Ivey took more than $100,000 from same Soros-backed PACs as Maddox

Chip Brownlee

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Republican incumbent Gov. Kay Ivey’s campaign criticized her Democratic challenger, Tuscaloosa Mayor Walt Maddox, twice on Thursday for accepting contributions from PACs backed by liberal donor George Soros, but Ivey has accepted $100,000 from the same set of PACs over the course of her campaign for governor.

Yellowhammer News, a Birmingham-based conservative media outlet, reported early Thursday morning that Soros gave $200,000 to a group of Tuscaloosa PACs chaired by Mike Echols, a longtime donor in Tuscaloosa and state politics.

Those contributions were reported Wednesday evening in mandatory financial disclosures with the Secretary of State’s Office.

That set of chain PACs — Cash PAC, CMG PAC II, ET PAC, Leadership PAC, Pride PAC II and T-Town PAC II — have contributed more than $600,000 to Maddox’s campaign through the primary and general election season.

Ivey’s campaign publicized Yellowhammer’s story quickly after its release this morning and criticized Maddox for accepting donations from the PACs.

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“George Soros is infamous for funding extreme organizations like Moveon.org, using his fortune to support gun control groups, describing capitalism as more dangerous than communism, and touting his influence over governments,” Ivey’s campaign said in a statement. “Which begs the question: is Walt Maddox working for the people of Alabama or the radical out of state liberals bankrolling his campaign?”

A request for comment about Ivey accepting donations from the PACs has not yet been returned.

The same set of chain PACs have long been involved in Alabama political contributions on both sides of the aisle.

The PACs have donated not only to Democrats but Republican candidates like former Gov. Robert Bentley during his campaigns, former Republican Alabama Attorney General Troy King during his primary run against Republican Attorney General Steve Marshall, Republican Secretary of State John Merrill and Ivey herself.

As recently as Oct. 2, Ivey accepted a $5,000 contribution from T-Town PAC II. During the same reporting period, Maddox received a $2,000 contribution from that PAC.

Both gubernatorial candidates have accepted contributions from all six PACs to which Soros gave money. In total, Ivey accepted $103,000 from those PACs over the primary and general election season.

Ivey’s campaign again criticized Maddox as a “lying liberal” after Maddox held a press conference Thursday, during which he called on Ivey to answer questions about former ALEA Secretary Spencer Collier’s allegations that she abused her power and had a state trooper reassigned to cover up the seriousness of a 2015 hospitalization in Colorado, when she was attending a conference as lieutenant governor.

“Walt Maddox is pushing these last second lies because his half baked liberal ideas have him losing in a landslide,” the campaign said in a statement. “With less than three weeks to go, not even $200,000 from George Soros can save him.”

APR was the first to report the hospitalization and Collier’s allegations.

Maddox has accepted far more money from the PACs, amounting to $622,400 so far in the campaign.

Maddox has not yet reported any contributions since Oct. 15, when Soros’ donations were recorded in the PAC filings. The next set of weekly filings are due on Monday.

 

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Elections

Opinion | Kay Ivey’s official calendar is surprisingly empty

Josh Moon

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In late-August and early-September, there was one question dominating Alabama’s governor’s race.

Where is Kay Ivey?

The governor at that point had scarcely been seen in a few days. In one 10-day stretch, she held no public events and somehow managed to avoid even local ribbon cuttings and bridge openings. And her opponent’s campaign was raising questions about her lack of activity.

Walt Maddox, at that point, had already challenged Ivey to a series of debates. She declined, offering a number of excuses, including that she was “busy governing the state.” She had also told her Republican primary challengers that she was “too busy” to debate them.

So, I wanted to know: Who was telling the truth? Was it a big deal? Was Ivey too busy?

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There was only one way to find out: I filed an Alabama Open Records Act request for Ivey’s official calendar for a three-week span (Aug. 24 through Sept. 14).

That span, I figured, would provide a solid look into Ivey’s days and would cover all of the days that the Maddox campaign had questioned her whereabouts.

On Wednesday, after paying $17 and some change to a public entity to produce public records that the public had already paid to be produced once, APR was provided with copies of Ivey’s official calendar.

Counting every entry on the calendar for 21 days — including travel time to and from the governor’s mansion (which apparently takes 30 minutes) and air travel to a variety of meetings and ribbon cuttings — there are less than 60 hours accounted for.

That’s less than three hours per day.

But it’s actually worse than that, because most of that time is compacted into a handful of days, leaving large chunks of time — whole calendar pages — simply blank.

In total, seven days were blank. Three other days had just one entry.

In one calendar week — Sunday, Sept. 2, thru Saturday, Sept. 8 — Ivey’s calendar shows just three and a half hours of scheduled time.

That week, her days were completely blank on Sunday, Labor Day Monday and Tuesday. She had a single phone call on Wednesday and a single meeting on Thursday. She hosted the Alabama Association of Regional Councils on Friday morning and wrapped up the grueling week with a proclamation signing at 10:30 a.m. that Friday.

I’ll remind you that this is the governor — a governor in the midst of a campaign.

You would think her calendar would be crammed with events and meetings and staff scrums and trips all over the place.

But … there’s just nothing.

And that’s not normal. I know that for a fact.

I’ve been to the Alabama Archives and sorted through the official calendars for the last three governors of this state. None of their calendars look like Ivey’s. Not even close.

I shared photos on Facebook Wednesday night of entries from random days on Robert Bentley’s calendar. In some instances, his days spilled over onto a second page.

The same was true with Bob Riley. His days, like Bentley’s, seemed to be planned from morning until night. Every day. Even on the weekends.

What’s happening with Kay Ivey should raise eyebrows and a ton of questions. Mainly: Can she actually do this job?

I think that’s a fair question at this point, after the public freeze-ups, the long disappearances, the managed time by her staff, the refusal to debate, and now these nearly blank calendar days.

And then there are two other questions:

Who is running this state?

And who are you voting for?

 

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Elections

Anti-abortion group National Right to Life endorses Ivey

Brandon Moseley

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National Right to Life announced their endorsement of Alabama Governor Kay Ivey (R) in the Nov. 6 general election.

Ivey said she proudly accepted the endorsement from National Right to Life, the third pro-life organization to endorse Ivey as Governor.

In a letter announcing their support for Kay Ivey, National Right to Life Executive Director David O’Steen and Political Director Karen Cross described Governor Ivey as a “strong advocate for life.”

National Right to Life applauded Governor Ivey’s support of the Pain-Capable Unborn Child Protection Act as well as her opposition to using taxpayer dollars to fund abortions and abortion providers.

“All Alabama voters who are concerned with the right to life and with the protection of the most vulnerable members of the human family should vote to reelect you as governor so that you can continue to advance vital pro-life public policies,” said Cross and O’Steen.

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Governor Ivey’s opponent, Tuscaloosa Mayor Walter “Walt” Maddox (D) has been running ads touting his pro-life and pro-gun credentials, which is odd for the modern Democratic Party; but Ivey is the one with the endorsements from the Susan B. Anthony List, Alabama Citizens four Life, and the National Rifleman’s Association (NRA). The NRA magazines with their Kay Ivey endorsements arrived in NRA households across Alabama on Tuesday.

“This endorsement reflects your commitment to strengthening a culture of life. We look forward to working with you to protect the most vulnerable members of the human family – unborn children and medically dependent or disabled persons – whose lives are threatened by abortion or euthanasia,” said Cross and O’Steen in their letter.

Kay Ivey has served two terms as Alabama’s state Treasurer and two terms as the Lieutenant Governor. She was elevated to Governor in April 2017 when then Governor Robert Bentley (R) resigned after the House Judiciary Committee began impeachment hearings. Ivey grew up on a cattle farm in Wilcox County, attended Auburn University, went to work as a school teacher, then went to work in state government.

Ivey’s campaign is emphasizing her administration’s strong job growth, robust economic growth, increasing pre-K access, and workforce development as reasons to elect her as governor. Mayor Maddox’s campaign is promising to extend Medicaid benefits to more people, raise fuel taxes, a state-sponsored lottery, taxing sports gambling, and a gambling agreement with the Poarch Creek Indians.

The general election will be on Tuesday, November 6. Also in this election, voters gets to vote on Amendment Two which states that nothing in the Alabama Constitution can be construed as allowing abortions to take place. The growing pro-life movement is hopeful that the U.S, Supreme Court will eventually overturn the highly controversial Roe versus Wade ruling that forced the states to allow abortion on demand.

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National

Brooks warns of potential debilitating national insolvency after deficit jumps 17 percent

Brandon Moseley

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U.S. Mo Brooks, R-Huntsville, issued a warning about the potential for a “Debilitating National Insolvency and bankruptcy that robs America of the prosperity and peace we have long enjoyed” following the release of the Treasury Department’s preliminary Fiscal Year 2018 deficit projection of $779 billion and the Comptroller General’s statement that America’s fiscal path is “unsustainable.”

“Yesterday’s Treasury Department report confirms that, when it comes to financial responsibility, Washington is a total and complete bipartisan failure,” Brooks said. “Thankfully, because of free-enterprise economic reforms, America’s economy is booming and federal revenues are up. Unfortunately, Washington spending has once again outstripped and left revenue growth in the dust.”

“At $779 billion for FY 2018, America’s deficit is 17 percent worse than last year’s $666 billion deficit. [3] Worse yet, the Congressional Budget Office estimates that next year’s deficit will near the $1-trillion mark,” Brooks wrote in a statement. “Even worse yet, the CBO estimates all subsequent deficits will blow past $1 trillion per year. [4] America’s total debt has exploded to $21.5 trillion. [5] U.S. Comptroller General Gene Dodaro has once again evaluated America’s deficit and debt situation and warned Washington that our financial path is ‘unsustainable’ (accounting language for ‘an insolvency and bankruptcy is in America’s future if we do not change our financially irresponsible path’).”

“American taxpayers shelled out about $325 billion in debt service costs in Fiscal Year 2018,” Rep. Brooks continued. “To put $325 billion into perspective, it is more than 15 times what America spends annually on NASA and more than 6 times what the federal government spends annually on transportation. Absent constructive change, the CBO warns Washington that debt service costs will exceed $800 billion per year within a decade. [7] $800 billion is more than what America currently spends on national defense.”

“This financial data points to one dangerous outcome: a debilitating national insolvency and bankruptcy that robs Americans of the prosperity and peace we have long enjoyed,” Rep. Brooks warned. “I cannot overemphasize how the voting public throughout America must do a far better job of studying and understanding economic issues well enough to elect senators and congressmen who have both the intellect to understand the threat posed by America’s deficits and accumulated debt and the backbone to do what it takes to prevent the economic destruction of a nation it took our ancestors centuries to build.”

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The primary driver of the debt has been entitlements, Brooks said. So-called “mandatory spending” on expensive social programs including: Medicare, Medicaid, and Social Security are increasing much faster than federal revenues or GDP. The Republican Congress has increased spending on Defense, cut taxes, but has not addressed exploding entitlement costs. The improving economy also means rising interest rates which dramatically increases the cost of servicing the national debt, which has ballooned to $21,634 billion.

Congressman Mo Brooks is seeking his fifth term in the United States Congress. He faces former Huntsville city attorney Peter Joffrion in the general election on November 6.

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What Does the Fiscal Cliff Deal Do to My Taxes?

by Brandon Moseley Read Time: 3 min
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