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Personal Finance: The fight over tax breaks

Michelle Singletary
Thursday, September 9, 2010; 10:19 AM

It's not even time to file our 2010 tax returns, but here we are in the middle of a battle over whether cuts from former President George W. Bush will stay in place or be allowed to expire.

The powers that be on the right and left are set for a fight, while the rest of us -- the regular people -- try to figure what all this hollering means to our bottom lines.

President Obama wants to kick to the curb a lot of tax breaks for the nation's wealthiest families or people making more than $250,000 a year. I've often received e-mails from some of those very people who argue they aren't really rich when you consider the high expenses of where they live (typically big cities like New York, Boston, and the D.C. metro area).

As Lori Montgomery reported yesterday in the Post, "Obama restated his long-held position that, while tax cuts for the middle class should be extended, the nation cannot afford to extend cuts for the wealthiest 2 percent of families."

In a speech in Cleveland Obama said his rollback plan "isn't to punish folks who are better off - it's because we can't afford the $700 billion price tag."

The tax cuts were enacted in 2001 and 2003 and are set to expire this year.

If you want to see the impact of the tax cuts if they stay or go, check out The Washington Post's interactive chart. You can click on various options to see how the decision will affect you.

And here's what the major political parties have to say about the cuts:

-- Democrats are betting that ending tax cuts for the rich will play in their favor

-- Republicans want to extend the tax cuts

What do you think? The Color of Money Question for this week: Are the tax cuts a benefit or burden to your bottom line? Send you responses to colorofmoney@washpost.com. Put "Tax Breaks Take Back" in the subject line.

Who's On Top?

USA Today and Time magazine recently reported on new research by a marketing firm that says that young, single and childless women are out-earning their similarly situated male counterparts.

Both publications reported on research from Reach Advisor, which found that in 147 out of 150 of the biggest cities in the U.S., the median full-time salaries of unmarried, childless women was 8 percent higher than guys in their peer group.

But hold up, wait a minute, says Slate's Heather Boushey in Are Young Women Earning More Than Their Boyfriends?

Boushey, senior economist at the Center for American Progress, says the numbers don't add up. She writes: "Digging a bit deeper into the data tells a more nuanced tale. Even if you can make more than the cute guy you saw at the bar last weekend, you may not out-earn the colleague sitting in the next cubicle. And, alas, it's the second comparison that really matters."

Boushey points to another study by the American Association of University Women that found that for college-educated women, the gap emerges as soon as they graduate. Alas, that research says a woman earns 5 percent less the first year out of school than a man who goes to the same college, gets the same grades, has the same major, takes the same kind of job with similar workplace flexibility perks, and has the same personal characteristics, such as marital status, race, and number of children.

"Until women with exactly the same qualifications match their male peers in earnings," Boushey writes, "there's plenty of work left for us all."

Celebrity Cash

Typically when I'm driving, I listen to talk radio. But yesterday I was picking up my kids from school and my 15-year-old switched to a station just as Travie McCoy's hit single "Billionaire" was playing. For the less hip, McCoy is the frontman for the band Gym Class Heroes. (Actually, I had no idea who this guy was. I had to Google him).

The first line of the song (cleaned up to delete the profanity) goes: "I wanna be a billionaire so fricking bad, buy all of the things I never had."

I had to refrain from launching into another lecture. But I let the kids hum along (they didn't really know the lyrics). I knew I would have another opportunity to point out that having a lot of money doesn't mean your life will be grand.

Just ask the parents of Caroline Giuliani.

The 21-year-old daughter of former New York City mayor Rudy Giuliani was caught stealing about $100 in beauty products at a Sephora store in Manhattan.

The Associated Press reported that the young woman, a Harvard University student, was recently sentenced to one day of community service. Her sentence is common for a first-time, low-dollar-amount shoplifting arrest.

I suspect Caroline was acting out as a result of all the drama her father put the family through because of his personal choices. This is yet another indication that money can't buy you everything. It most definitely can't buy a pass from dysfunction.

Responses to Color of Money Question

Last week's Color of Money Question was about a woman who was complaining to Ask Amy about money her sister was receiving from her sister's in-laws.

Amy said the sister getting financial help was a fool to talk to the other sister about her business. So I asked you what you thought. Here's what some of you had to say:

"I would have told her to mind her own business," writes Denise of Chicago. "If her sister is lucky enough to have in-laws who can afford to give them the opportunity to not use up their savings, then they are just that lucky and it really is no concern of the sister's. It sounds a little like crabs in a barrel to me. The less fortunate sister can't be happy for her more fortunate sister but wants to see that she not get too far ahead of her."

A reader from Philadelphia, Pa. was a bit more forgiving of the jealous sister. She wrote: "I agree in principal with Amy's answer, however, I live in a similar situation where a family member also takes advantage of other family members financially. And the problem is that while it may not be anyone else's business, because it works, this irresponsible, dependent kind of behavior tends to then continue into other relationships."

"Don't take someone else's inventory, " says Sara Solnick of South Burlington, Vt. "If this was your own parent or your own child that you ultimately feel some financial responsibility for, you could discuss your concerns with them. But it isn't, so leave it alone and focus on taking care of your own household the best way you can."

Debt Defeaters

I am looking forward to sharing all of the great debt defeater stories I have received so far on my next video chat.

But, I'm looking for more of your stories. I want to applaud you for finally taking over your life and conquering debt.

So send your debt defeater story to colorofmoney@washpost.com. Put 'Debt Defeater' on the subject line. Be sure to include:

-- Your name

-- City and state

-- How much debt you've erased (the total amount)

-- How long it took you to get rid of the debt

-- How you got rid of the debt

-- Finally, tell me how it feels to be rid of that debt burden.

Upcoming Events

- Saturday, September 18, 4:30 p.m. to 5:30 p.m.: I will be reading excerpts from my latest book, "Power to Prosper: 21 days to Financial Freedom," at the Capital BookFest in Harrisburg, Pa. at the State Museum of Pennsylvania located at 300 North St., Harrisburg, Pa., 17120. Capital BookFest is a FREE, one-day literary festival. For more information, go to www.capitalbookfest.org.

- Thursday, September 23, 7:30 p.m.: I'm appearing at the 2010 Fall for the Book Festival in the Johnson Center lower level (in Dewberry Hall South) on the Fairfax campus of George Mason University.

--Saturday, October 2, 5:30 p.m. to 6:30 p.m.: Come see me at the Boulevard at Capital Centre, located at 900 Capital Centre Blvd., Largo, Md., 20774. For more information, go to www.capitalbookfest.org.

--Thursday, November 4: I will be facilitating the Money Madness session at the Essence Women's Conference located in New York City at the Marriott Marquis. For registration and ticket information, go to www.essence.com/ewc.

Tia Lewis contributed to this e-letter.

You are welcome to e-mail comments and questions to singletarym@washpost.com. Please include your name and hometown; your comments may be used in a future column or newsletter unless otherwise requested.

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