The Budget Battle and Your Wallet; Which Bush Proposals Are Likely to Survive; Band-Aid on the AMT
With Democrats now in control of Congress, many proposals President Bush made yesterday affecting individuals' wallets -- including killing the estate tax and overhauling the tax treatment of health- insurance benefits -- appear to be heading for the cutting-room floor.</br></br>But a few others, such as giving the Internal Revenue Service more money to pursue tax dodgers and protecting millions of people for another year from being ensnared in the alternative minimum tax, could attract bipartisan support.</br></br>Here is how the president's proposed $2.9 trillion budget may affect your pocketbook.</br></br>TAXES: The president is asking for nearly $2 trillion in net tax cuts over the next decade, mainly by extending provisions scheduled to expire in coming years. For example, the top 15% rate on long-term capital gains and most corporate dividends is set to expire at the end of 2010. So are today's federal income-tax rates, which range as high as 35%. Without legislation, those rates would head higher starting in 2011.</br></br>Don't expect Congress to act soon on the president's proposals to make those tax rates permanent. Lawmakers effectively have punted that issue into the elections of 2008, and beyond, amid continuing concern about reining in the federal budget deficit.