"I've got no problem spending money on tax breaks for folks at the top who don't need them and didn't even ask for them, but they object to helping folks laid off in this recession who really do need help," said President Barack Obama.
It has been a misconception that the Bush tax cuts bring tax relief to just the wealthiest of Americans. In reality, the tax cuts have benefited just about every taxpayer. Unfortunately, if they come to an end at the end of this year individual taxpayers, including low income taxpayers, may be facing much higher taxes next year.
Currently there are six tax brackets with 10 percent being the lowest and 35 percent the highest. But if Congress lets the tax cuts disappear there will be five new tax brackets with the lowest at 15 percent instead of 10 and 39.6 percent as the highest.
If you have investments that bring you dividends and long term capital gains, watch out.
Right now you pay 15 percent in taxes for both, but next year the long term gain rate could jump to 20 percent and the dividend maximum rate could skyrocket to 39.6 percent, that's more than double the going rate.
Without Bush's tax cuts there would be a return of the marriage penalty, meaning your standard deduction would drop forcing a married couple filing jointly to pay more in taxes than if they were single.
And finally, you may lose some mortgage interest deductions and charitable deductions depending on your income, unless the Bush tax cuts are renewed by Congress and the president agrees to sign them into the federal tax code.
The actual fate of the tax cuts is unclear, but there is some support in Congress on both sides of the aisle to extend the Bush tax cuts. The president isn't on board just yet, but there has been little discussion on the subject with everything else the president has had to deal with lately.