So... I Should Maybe Switch?

Watching the news earlier this evening, kinda out of one eye while reading with the other. The words "tax cut extension" and "fierce debate" caught my attention. There's a talking head Democratic Congressman on screen and he says something to the effect "...and these tax cuts benefit only the wealthiest Americans, those making over one hundred thousand dollars."

Whoa. Say what?

I didn't catch this guy's name (I should start taking notes if I'm gonna write about this krep), and a search of Fox News didn't yield any hits, other than the ubiquitous Charlie Rangel. I did find a short article on the story, and the money grafs are:

"Middle-income families lose under this Republican tax cut bill," said Rep. Charles Rangel of New York, the panel's top Democrat.

In the House, the tax writing committee kept alive reduced tax rates on investment income, capital gains and dividends, in 2009 and 2010. If left alone, the maximum 15 percent tax rate would increase after 2008 to 20 percent for capital gains and regular income tax rates for dividends.

In the Senate, lawmakers would prevent the alternative minimum tax from pinching millions more taxpayers next year through a change that reduces that tax almost $32 billion. Invented as a mechanism to prevent the most wealthy taxpayers from evading taxes, inflation expands its reach every year unless lawmakers stop it.

Thomas said he opted to extend tax cuts for investment income rather than address the alternative minimum tax because it could help more taxpayers of all incomes.

"I did not want to put the wealthiest people getting a tax benefit in the package," he said. "There are far wealthier people, and fewer of them, who would receive the benefit under the alternative minimum tax."

Specifically, about 14 million would benefit from an alternative minimum tax change, but 62 million people would benefit from reduced rates on investment income, Thomas said. Households paying taxes on capital gains and dividends include older retirees, he added.

Damned Straight! (emphasis mine, of course) "Thomas" is House Ways and Means Committee Chairman Bill Thomas, R-Calif.

If I were still working, I'd certainly be siding with the Republicans, and with the Senate's version of the bill. No one wants to get hit with the AMT. But, my tax bracket has changed radically since I retired (you may read that as "genteel poverty"). So, as a member of the low-income class, aren't the Dems talking to me? Shouldn't I be all for soaking the rich? Should I switch parties?

Not exactly. My 1099-Rs (pension income) make up about 85% of my total income, dividends and interest on non-IRA investments, plus what portion of my IRA principal I withdraw, make up the rest. Granted, my particular tax break is small, being only the difference between the current 15% tax and a 20% tax if the cuts aren't renewed. There's other differences, as well, but once again, they're small. It's a matter of principle, not principal. I already paid taxes on the money I'm being taxed on. This irritates the Hell out of me, and lots of folks like me, especially those investors smarter (or luckier) than me with brokerage accounts a lot fatter than mine. Still, I'll take whatever bone I'm thrown.

The Republicans don't get off my hook, however. I want taxes on dividends and interest eliminated completely, and those spineless ersatz-fiscal conservative Republicans have been totally cowed by the Dems. The tax cuts I want are dead, dead, dead. Why I'll never know. But if this kind of krep keeps up I'll be looking for a viable third party to vote for in 2006. Can you say "Libertarian?"