POLITICS, TAXES & CUPCAKES

When it comes to election years we hear a lot of discussion around issues like taxes, social security, jobs, health insurance and budget deficits. 

You may already know that the Bush and the Obama Tax Cuts are set to expire or “sunset” in 2013. And unless Congress changes current law, individual income tax rates will revert to pre-2001 levels. The Bush Tax Cuts, which represent a much larger percentage of the cuts, were extended in 2010 for a two-year period by the Tax Relief, Unemployment Insurance Re-authorization, and Job Creation Act of 2010, which is why 2013 is currently the magic number.

According to the Tax Policy Center one of the biggest increases for average households potentially comes from the expiration of the 2% Social Security tax reduction which was enacted in 2011 and in effect for 2011 and 2012. Also we could see the lowest income tax rate go from 10% to 15% and the highest rate increase from 35% to 39.6%.

Another increase would be generated by the changes in capital gains rates: the reverse of the phase out of taxes on long-term capital gains for people in the 15% and below tax bracket and the increase from 15% to 20% for other taxpayers. This could largely affect people whose incomes are derived mainly from what in tax-speak is called “unearned income”.[1]
 
In 2001 and 2003 Americans saw tax rates on ordinary income and qualified dividends go down; the child tax credit expanded, as was the child and dependent care tax credit. Also the limitation on itemized deductions and phase out of personal exemptions disappeared. President Obama proposes to extend those tax cuts for low- and middle income tax payers.[2]
 
In 2001, Congress voted to phase out the estate tax in steps until 2010 when it was completely repealed. The 2010 Tax Act reinstated the estate tax (35%) but increased the exemption to $5 million. And making a grand debut was the transferability of exemption balance between spouses meaning - any of the $5 million exemption not used by one spouse upon death may be added to the exemption available for the second spouse provided he or she has not remarried. If no changes are made, then in 2013, estate limits in effect prior to 2001 would be reinstated.  This denotes that estates valued at $1 million or more would be subject to tax at progressive rates up to 60%, and the portability option would disappear. However, the Obama budget proposes to permanently setting the estate tax at its 2009 level beginning in 2013 with estates worth more than $3.5 million set to pay 45% on the value that is over the $3.5 million benchmark. It would also make portability permanent, thereby allowing married couples to share a combined exemption of $7 million.

If all of this makes your head spin, like Linda Blair in the Exorcist, be assured you are not alone. Also please be aware I am neither condoning nor condemning any of the provisions, nor those who implemented, or extended them or may potentially change them or allow to them to expire. I believe education and understanding helps you to make informed decisions. Perfectly put by Dragnet’s Sgt. Joe Friday, I am presenting - “Just the facts”.

Now at this point you must be wondering what the heck cupcakes have to do with tax cuts. Well actually nothing. But I love cupcakes! I like to eat them; I like to make them; and I love to share them. So below is my recipe for Coconut Crème Anglaise Cupcakes. Try them out and let me know what you think!

---------------

Cupcake Ingredients

2 ¼  cups of cake flour
1 tablespoon baking powder
½  teaspoon kosher salt
1 ¼  cups whole milk, room temperature
4 large egg whites, room temperature
1 stick unsalted butter, room temperature
1 ½ cups granulated sugar
Seeds scraped from one vanilla bean
2 teaspoons pure vanilla extract

Cupcake Directions

1.      Preheat oven to 350 degrees and line cupcake pan with paper liners.

2.      In a large bowl, sift together the flour, baking powder and salt.

3.      In a medium bowl, whisk together the milk and egg whites. 

4.      Beat the butter, sugar and vanilla bean seeds at medium speed for 3 minutes, or until the butter and sugar are well combined and light. Add the vanilla extract and one third of the flour mixture, still beating on medium speed.

5.      Beat in half of the milk-egg mixture, and then beat in half of the remaining dry ingredients until well mixed.

6.      Add the rest of the milk and eggs, beating until smooth, and then add the last of the dry ingredients. Beat for another two minutes or so to make sure everything is well mixed and aerated.

7.      Fill each cupcake liner about 2/3’s full. 

8.      Bake for 18-24 minutes, depending on altitude or until a toothpick inserted into the center come out clean. Let them cool before attempting to fill them or they will fall apart.

Ingredients for Crème Anglaise

2 tablespoons of  butter
¾  cup of granulated sugar
2 cups of cream
1 teaspoon vanilla
¼ cup cornstarch
½ teaspoon of salt
2 egg yolks, beaten

 

Directions for Crème Anglaise

Melt butter and add sugar, cornstarch and salt. Add cream slowly to mixture. In saucepan, heat until just boiling and immediately reduce heat. Slowly add egg yolks, constantly stirring and cook for about more 2 minutes. Add vanilla. Continue stirring. Remove when well combined and thickened. If you over cook it the sauce will break. Let it cool.

A broken sauce means either the fat of the butter or cream separates from the emulsification or due to excessive heat the egg yolks scramble and then the sauce becomes lumpy. Typical reasons for a sauce breaking are temperature too high, adding the fat too quickly, not whisking the fat into the sauce quickly enough, or allowing the mixture to stick to the sides by not stirring constantly while being heated.

Filling the Cupcakes

Using a medium round holed Wilton tip, fill a pastry bag with Anglaise and press the tip into the top of your cupcake. Gently squeeze the bag, filling the cupcake slowly so it just comes out of the top.

Ingredients for Coconut Topping

Confectioners’ sugar

Water

Shredded Coconut

Directions for Coconut Topping

Make paste using just enough water to make it smooth but not so much that it is runny. This is not exact – think of glue. Turn cupcake upside down and swirl in the frosting paste until the top of the cupcake is lightly covered.

Spread the shredded coconut onto a plate or into a bowl making sure to separate out or break up chunks and now swirl frosting topped cupcakes in the coconut. If the paste gets too stiff simply add a little more water a teaspoon at a time stirring it in as you do.

You now have yummy Coconut Crème Anglaise Filled Cupcakes!

---

[1] Income derived from sources other than employment, such as interest and dividends from investments, or income from rental property.

[2] Low- and middle- income tax payers are defined as married couples with income below $250,000, and singles under $200,000, both 2009 values, as indexed for inflation.