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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.

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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.

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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Alabama voters’ priorities: Education, healthcare and government ethics

Chip Brownlee

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A new report shows there is broad agreement among Alabama voters about what issues are important to them as the state nears a statewide election in November.

The report, published by the Public Affairs Research Council of Alabama, is the result of a survey the group conducted, polling Alabama voters to determine their thoughts about the general direction of the state and issues that are concerning to them.

Based on the responses to the survey, PARCA identified and ranked voters’ top 10 critical issues.

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First among them: Pre-K-12 education, health care and government ethics and corruption.

Seventy percent of Alabama voters indicated that they are “very concerned” about the state and direction of the state’s public education system. Education was ranked first among voters’ concerns. And the concern was spread across the political spectrum with 60 percent of Republicans, 66 percent of independents and 80 percent of Democrats listing education as a concern.

PARCA then asked a follow-up question to determine what exactly voters’ were concerned about when it comes to education.

“When asked to identify their top priority regarding K–12 education, a plurality (44%) selected funding,” the report reads. “Nearly a quarter selected teacher preparedness as their top priority with lesser percentages selecting student achievement and class size. Pluralities of every partisan stripe prioritize funding.”

Just behind education was healthcare, with 65 percent of respondents listing health care as something they are “very concerned” about.

“Majorities of every demographic and political party say they are very concerned about healthcare,” the report reads. “Those with less than full-time employment and the self- employed are even more likely to say they are very concerned.”

More than half of those who responded to the survey said the cost of insurance was their top priority, and about 20 percent said expanding Medicaid, improving rural access to care and prescription drug costs were their top concerns.

Across the political spectrum, most respondents said the cost of insurance was their priority.



Over the course of a year in 2016 and 2017, the top three elected officials in the state of Alabama were removed after corruption or ethics scandals. Former Alabama House Speaker Mike Hubbard was convicted of ethics violations, former Chief Justice Roy Moore was effectively removed for violating judicial ethics and former Gov. Robert Bentley resigned after sex scandal with a top aide.

At least 65 percent of respondents said they are “very concerned” about government corruption and ethics.

“While majorities of nearly every demographic or political group are concerned, there are some differences among partisan identifiers: A majority of Republicans are very concerned, while two-thirds of independents and over 80% of Democrats are very concerned,” the report reads.

While there is an expectation of polarization among the political parties, PARCA’s survey indicates there is actually a high degree of agreement among political parties about what the priorities are.

“When we look at the Top 10 within each group of partisan identifiers, we see a good deal of overlap,” according to the report. “All include five common issues in their top seven: K–12 Education, Healthcare, Government Corruption and Ethics, Poverty and Homelessness, and Jobs and the Economy. Another six issues are shared by two partisan groups.”

Only three issues appeared among the priorities of those of a single political party: tax reform, prison and sentencing reform and environmental protection.

There was also a lot of agreement among different demographics including race, age, educational attainment, wealth and age groups.

“While there are some interesting differences across groups, many of the top issues overall are also represented in the subgroups,” the report reads.

Overall, the report shows that there is not polarization among traditional political, ideological, race or generational lines

“Policymakers have an opportunity to respond to immediate, often highly personal issues that concern voters,” the report reads. “This research suggests that elected officials and candidates have an opportunity to show leadership and to build broad coalitions to address Alabama’s most pressing challenges.”

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Byrne says he is “profoundly disturbed” by information in the IG’s Report

Brandon Moseley

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Friday, Congressman Bradley Byrne (R-Montrose) said that he is “profoundly disturbed” by the report by the Department of Justice’s Inspector General Michael Horowitz and that “The reports casts a cloud over the FBI. The Inspector General was highly critical of the FBI’s handling of the Hillary Clinton email investigation prior to the 2016 presidential election.

“I am profoundly disturbed by the findings released in the report by Inspector General Michael Horowitz, not only as a Member of Congress, but as an officer of the court and as an American,” Congressman Byrne said. “It is apparent that actions by the FBI during the 2016 presidential election deviated from longstanding policy, practices, and norms of the FBI. High ranking FBI officials showed a willingness to take official actions to hurt President Trump’s electoral chances. Others actively leaked sensitive materials to the press in exchange for sporting tickets, meals, and other personal favors. This and other egregious behavior noted in this report cannot be tolerated.”

“The report casts a cloud over the FBI and has caused near irreparable damage in the eyes of the American people to one of our nation’s most important institutions,” Byrne continued. “These findings warrant a full-scale investigation by the Department of Justice, including the possibility of criminal charges.”

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The IG’s report was highly critical of fired FBI Director James Comey.

“At the very least, this report confirms President Trump’s decision to fire FBI Director James Comey,” Byrne said. “The report highlights Director Comey’s subjective, ad hoc decision-making throughout the investigation process, ultimately harming the reputation of the FBI as a fair administrator of justice. Director Comey’s behavior after he was fired from the FBI and during his book tour is in many ways even more alarming. It seems he has forgotten that his obligations did not end when he was removed from the FBI.”

“There are many fine people in the FBI and the Department of Justice who have felt the repercussions of this situation, but I refuse to let the egregious misbehavior of a few harm the reputation of these agencies and the rank-and-file people who work there,” Byrne added. “That said, the behavior of a few has tainted multiple investigations involving the 2016 presidential campaign. The report only adds weight to my call for Robert Mueller to either put forward a case or wrap up his investigation once and for all.”

President Donald J Trump (R) took to Twitter to respond to the report. “The IG Report is a total disaster for Comey, his minions and sadly, the FBI. Comey will now officially go down as the worst leader, by far, in the history of the FBI. I did a great service to the people in firing him. Good Instincts. Christopher Wray will bring it proudly back!”

The President added, “FBI Agent Peter Strzok, who headed the Clinton & Russia investigations, texted to his lover Lisa Page, in the IG Report, that “we’ll stop” candidate Trump from becoming President. Doesn’t get any lower than that!”

Former Director Comey also commented on Twitter, “I respect the DOJ IG office, which is why I urged them to do this review. The conclusions are reasonable, even though I disagree with some. People of good faith can see an unprecedented situation differently. I pray no Director faces it again. Thanks to IG’s people for hard work.?

While the IG was highly critical of Comey it did say there was no evidence of political bias on the part of Comey.

Congressman Bradley Byrne represents Alabama’s First Congressional District.

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Elections

Countryman refuses to endorse Maddox, will continue campaign as a write-in

Brandon Moseley

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Chris Countryman ran in the Democratic primary; where he finished in sixth place with just 4,973 votes (1.7 percent). On Friday, rather than support the Democratic nominee, Tuscaloosa Mayor Walter “Walt” Maddox, Countryman announced that he would continue his campaign as a write-in.

“I made a promise to the people of Alabama that I would stand, that I would fight, and that I would do whatever it takes to finally get our state back on track,” Countryman said in a statement. “Throughout my years of public service, I believe I’ve been preparing for something bigger than myself. I’ve made a career of putting others first. And I can’t stop that now.”

“Alabama needs someone who’ll finally fight for them,” Countryman continued, “We are all tired of politicians making promises they can’t keep. We Alabamians are tired of them taking money that’s not theirs. We are tired of politicians putting party before principle, and winning before justice. We are tired of seeing politicians who lie, cheat, steal and using their elected position for their own selfish gain.”

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“Alabama’s elected officials need to regain the trust of the citizens,” Countryman stated. “So I won’t walk away. I refuse to be someone who broke his promise to the people. When I said that I would stand, that I would fight. and that I would not give up, I meant it! I will continue to fight, and I will continue to stand with the people as a Progressive Democrat. I will be continuing my campaign for Governor as a write-in candidate on the November 6th election ballot. There are still a lot of concerns that need to be addressed prior to the November election. For this reason. I invite Walt Maddox and Kay Ivey to join me in discussing these important issues during a live, publicly broadcast, formal debate. It is my hope that Maddox and Ivey will take this opportunity seriously, and I look forward to meeting with them both very soon.”

“To respond to my invitation please contact my campaign assistant via email: [email protected] She will be happy to coordinate with everyone to find a date and venue that works with each candidate,” Countryman concluded,

If elected, Countryman would be the first openly homosexual person elected statewide in the history of Alabama. His husband, Bruce, would be the first male spouse of an Alabama Governor, since George Wallace, during his wife: Lurleen’s governorship.

Maddox won the Democratic primary without a runoff; but he won only 54.6 percent of the Democratic vote. 37.7 percent of his votes came from Tuscaloosa and Jefferson Counties and ominously twice as many voters were voting in the Republican primary. Ivey alone had more voters than all the Democratic candidates combined. To compete with Ivey, Maddox is going to have to improve his popularity statewide and figure out how to get record Democrat turnout.

Countryman organized the Wiregrass for marriage equality.

Countryman struggled to raise money as a Democratic party candidate. Raising money as a write-in will likely be even more challenging. Chad “Chig” Martin is also running a write-in campaign for governor.

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What Does the Fiscal Cliff Deal Do to My Taxes?

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