The Christian Science Monitor reports President Obama has struck a deal with Senate Republicans to extend the Bush-era tax cuts for all Americans. Included in the compromise is an extension of unemployment benefits for another 13 months and a reduction in the Social Security tax.
The tax cuts last for another two years, bringing it to bear on the 2012 presidential election. The news comes as a welcome relief to many Americans who thought they’d have to pay more taxes next year or possibly skimp on the holiday season.
Having more spending money is always a good thing. Here’s how the extended tax cuts will help my family have more money in our pockets.
Both my wife and I work, and we have a teenage daughter and a pre-teen son. We are a typical American family with a house, a yard and pets. Until the tax cut compromise happened, we were planning on cutting back a few non-essential items next year.
When the tax cuts originally happened several years ago, it gave us an extra $10 or so per week in spending money which went for an extra night eating out or some other non-essential treat. Now we have a little more income, and the savings have been greater.
My family makes around $80,000 to $100,000 per year, as my wife and I both have substantial jobs. We have never been hurting for money and we spend wisely, so the economic recession and any tax issues have been kind to us as far as our finances.
Not only that, but the savings in the Social Security tax also add up over the year. That extra income adds up to about another $25 per week when the rate drops two percentage points. Now those tax cuts add up to over a hundred dollars each per month for us, which begins to get substantial.
Imagine what the savings can do for all Americans. Plus, you have to figure people will be spending that money on food, clothes and even a new car.
My family will likely use to the money to get some extra things around the house or put more money into our kids’ college funds. The government would like us to spend the money as opposed to save it, but when times are good, we should probably put more of that money into a savings account rather than spend it. We already save some money each week, so these tax breaks will give us a little more breathing room when it comes to our finances.
Christian Science Monitor, “Tax compromise: Obama finally sets a bipartisan model.”