Six months to go until largest tax hikes in history

• QuakerOats

  http://www.atr.org/six-months-untilbr-largest-tax-hikes-a5171#
  
  
  In just six months, the largest tax hikes in the history of America will take effect. They will hit families and small businesses in three great waves on January 1, 2011:
  
  First Wave: Expiration of 2001 and 2003 Tax Relief
  
  In 2001 and 2003, the GOP Congress enacted several tax cuts for investors, small business owners, and families. These will all expire on January 1, 2011:
  
  Personal income tax rates will rise. The top income tax rate will rise from 35 to 39.6 percent (this is also the rate at which two-thirds of small business profits are taxed). The lowest rate will rise from 10 to 15 percent. All the rates in between will also rise. Itemized deductions and personal exemptions will again phase out, which has the same mathematical effect as higher marginal tax rates. The full list of marginal rate hikes is below:
  
  - The 10% bracket rises to an expanded 15%
  - The 25% bracket rises to 28%
  - The 28% bracket rises to 31%
  - The 33% bracket rises to 36%
  - The 35% bracket rises to 39.6%
  
  Higher taxes on marriage and family. The “marriage penalty” (narrower tax brackets for married couples) will return from the first dollar of income. The child tax credit will be cut in half from $1000 to $500 per child. The standard deduction will no longer be doubled for married couples relative to the single level. The dependent care and adoption tax credits will be cut.
  
  The return of the Death Tax. This year, there is no death tax. For those dying on or after January 1 2011, there is a 55 percent top death tax rate on estates over $1 million. A person leaving behind two homes and a retirement account could easily pass along a death tax bill to their loved ones.
  
  Higher tax rates on savers and investors. The capital gains tax will rise from 15 percent this year to 20 percent in 2011. The dividends tax will rise from 15 percent this year to 39.6 percent in 2011. These rates will rise another 3.8 percent in 2013.
  
  Second Wave: Obamacare
  
  There are over twenty new or higher taxes in Obamacare. Several will first go into effect on January 1, 2011. They include:
  
  The “Medicine Cabinet Tax” Thanks to Obamacare, Americans will no longer be able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin).
  
  The “Special Needs Kids Tax” This provision of Obamacare imposes a cap on flexible spending accounts (FSAs) of $2500 (Currently, there is no federal government limit). There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children. There are thousands of families with special needs children in the United States, and many of them use FSAs to pay for special needs education. Tuition rates at one leading school that teaches special needs children in Washington, D.C. (National Child Research Center) can easily exceed $14,000 per year. Under tax rules, FSA dollars can be used to pay for this type of special needs education.
  
  The HSA Withdrawal Tax Hike. This provision of Obamacare increases the additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent.
  
  Third Wave: The Alternative Minimum Tax and Employer Tax Hikes
  
  When Americans prepare to file their tax returns in January of 2011, they’ll be in for a nasty surprise—the AMT won’t be held harmless, and many tax relief provisions will have expired. The major items include:
  
  The AMT will ensnare over 28 million families, up from 4 million last year. According to the left-leaning Tax Policy Center, Congress’ failure to index the AMT will lead to an explosion of AMT taxpaying families—rising from 4 million last year to 28.5 million. These families will have to calculate their tax burdens twice, and pay taxes at the higher level. The AMT was created in 1969 to ensnare a handful of taxpayers.
  
  Small business expensing will be slashed and 50% expensing will disappear. Small businesses can normally expense (rather than slowly-deduct, or “depreciate”) equipment purchases up to $250,000. This will be cut all the way down to $25,000. Larger businesses can expense half of their purchases of equipment. In January of 2011, all of it will have to be “depreciated.”
  
  Taxes will be raised on all types of businesses. There are literally scores of tax hikes on business that will take place. The biggest is the loss of the “research and experimentation tax credit,” but there are many, many others. Combining high marginal tax rates with the loss of this tax relief will cost jobs.
  
  Tax Benefits for Education and Teaching Reduced. The deduction for tuition and fees will not be available. Tax credits for education will be limited. Teachers will no longer be able to deduct classroom expenses. Coverdell Education Savings Accounts will be cut. Employer-provided educational assistance is curtailed. The student loan interest deduction will be disallowed for hundreds of thousands of families.
  
  Charitable Contributions from IRAs no longer allowed. Under current law, a retired person with an IRA can contribute up to $100,000 per year directly to a charity from their IRA. This contribution also counts toward an annual “required minimum distribution.” This ability will no longer be there.
  
  
  ............ No doubt the worst possible path to take imaginable. The radical leftists have already damaged and burdened this country so badly and so quickly, and now we face massive tax increases that will deliver the final crippling blow. How can we continue to penalize the taxpayers, the workers, the producers just so government can grow and grow and grow and grow ???????????????????? Change we can believe in ................
• tk421

  

  But but I thought repealing the Bush tax cuts would only effect the rich?
• IggyPride00

  

  There is a reason they are expiring, because Bush knew in 2001 that we couldn't afford them, and had to sunset them after 10 years to keep the projection of how much they would cost politically palatable. BHO had to do the same thing to make healthcare look more affordable than it really is.
  
  They will keep the cuts for everyone but the 35% bracket, which is going back up to 39.6%.
  
  The Death tax Republicans were retarded about, because the Democrats tried to cut a deal on it with them this year to keep it from going to zero, and also from returning to the old rate next year but they didn't want to play ball. Don't look for that to be high on the list for Democrats now given the fiscal situation.
  
  The way I look at it we borrowed the last 10 years of tax cuts from China, so it is time to start paying the piper I guess. Living on credit is great, but at some point the bill does invevitably come due and out time is here.
  
  Besides, Reagan raised taxes multiple times over the course of his administration and so did Clinton and Bush. This is not unheard of.
  
  It was Dick Cheney and his "Ronald Reagan proved deficits don't matter" decree towards fiscal policy that set us on this trainwreck so we are getting what we deserve.
• IggyPride00

  

  tk421;408808 wrote:But but I thought repealing the Bush tax cuts would only effect the rich?

  
  They will pass a bill between now and next year to keep the rates the same for everyone up to the 35% bracket. As of now they will reset, but it won't happen since BHO plans on running in 2012 and can't raise those until then. He always said the 35% bracket was reseting, so that is no surprise.
• QuakerOats

  We CAN afford tax cuts.
  
  We CANNOT afford more government.
  
  End of story!
• BCBulldog

  

  I will always oppose tax increases at the federal level unless the revenue generated (if there is any - Laffer curve) is used strictly to pay off the national debt. Not for the expansion of government. Since we know who is in charge, there is no doubt that the debt will only expand further. If we are going to maintain this crippling deficit spending, I would at least like to see it occur for the purpose of tax relief. At least that has a chance of actually stimulation the economy.
• BoatShoes

  This thread title is incredibly misleading...the largest tax hike nationwide is unequivocally world war II when the income tax went from being a class tax on the rich to a mass tax (as the saying goes).
  
  Check out this WWII propaganda. Imagine a spongebob square pants telling us we need to pay off the deficit. http://www.youtube.com/watch?v=dKvgL8Jt_60
• ptown_trojans_1

  

  I thought the tax rate was going back to the level of the 90s, which to me, was an alright time in our economy.
  
  I don't mind paying taxes, shelled out $500 this year. Taxes should go up as spending goes down to help balance the budget and end the overall debt. We should all have to pay now for the negligence of both parties the last 20 years.
• Footwedge

  BCBulldog;408908 wrote:I will always oppose tax increases at the federal level unless the revenue generated (if there is any - Laffer curve) is used strictly to pay off the national debt. Not for the expansion of government. Since we know who is in charge, there is no doubt that the debt will only expand further. If we are going to maintain this crippling deficit spending, I would at least like to see it occur for the purpose of tax relief. At least that has a chance of actually stimulation the economy.

  Huh? You do understand that Republicans have spent a lot more than Democrats have right? At least they have per year over the past 3 decades.
• Footwedge

  QuakerOats;408733 wrote:http://www.atr.org/six-months-untilbr-largest-tax-hikes-a5171#
  
  
  In just six months, the largest tax hikes in the history of America will take effect. They will hit families and small businesses in three great waves on January 1, 2011:
  
  First Wave: Expiration of 2001 and 2003 Tax Relief
  
  In 2001 and 2003, the GOP Congress enacted several tax cuts for investors, small business owners, and families. These will all expire on January 1, 2011:
  
  Personal income tax rates will rise. The top income tax rate will rise from 35 to 39.6 percent (this is also the rate at which two-thirds of small business profits are taxed). The lowest rate will rise from 10 to 15 percent. All the rates in between will also rise. Itemized deductions and personal exemptions will again phase out, which has the same mathematical effect as higher marginal tax rates. The full list of marginal rate hikes is below:
  
  - The 10% bracket rises to an expanded 15%
  - The 25% bracket rises to 28%
  - The 28% bracket rises to 31%
  - The 33% bracket rises to 36%
  - The 35% bracket rises to 39.6%
  
  Higher taxes on marriage and family. The “marriage penalty” (narrower tax brackets for married couples) will return from the first dollar of income. The child tax credit will be cut in half from $1000 to $500 per child. The standard deduction will no longer be doubled for married couples relative to the single level. The dependent care and adoption tax credits will be cut.
  
  The return of the Death Tax. This year, there is no death tax. For those dying on or after January 1 2011, there is a 55 percent top death tax rate on estates over $1 million. A person leaving behind two homes and a retirement account could easily pass along a death tax bill to their loved ones.
  
  Higher tax rates on savers and investors. The capital gains tax will rise from 15 percent this year to 20 percent in 2011. The dividends tax will rise from 15 percent this year to 39.6 percent in 2011. These rates will rise another 3.8 percent in 2013.
  
  Second Wave: Obamacare
  
  There are over twenty new or higher taxes in Obamacare. Several will first go into effect on January 1, 2011. They include:
  
  The “Medicine Cabinet Tax” Thanks to Obamacare, Americans will no longer be able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin).
  
  The “Special Needs Kids Tax” This provision of Obamacare imposes a cap on flexible spending accounts (FSAs) of $2500 (Currently, there is no federal government limit). There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children. There are thousands of families with special needs children in the United States, and many of them use FSAs to pay for special needs education. Tuition rates at one leading school that teaches special needs children in Washington, D.C. (National Child Research Center) can easily exceed $14,000 per year. Under tax rules, FSA dollars can be used to pay for this type of special needs education.
  
  The HSA Withdrawal Tax Hike. This provision of Obamacare increases the additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent.
  
  Third Wave: The Alternative Minimum Tax and Employer Tax Hikes
  
  When Americans prepare to file their tax returns in January of 2011, they’ll be in for a nasty surprise—the AMT won’t be held harmless, and many tax relief provisions will have expired. The major items include:
  
  The AMT will ensnare over 28 million families, up from 4 million last year. According to the left-leaning Tax Policy Center, Congress’ failure to index the AMT will lead to an explosion of AMT taxpaying families—rising from 4 million last year to 28.5 million. These families will have to calculate their tax burdens twice, and pay taxes at the higher level. The AMT was created in 1969 to ensnare a handful of taxpayers.
  
  Small business expensing will be slashed and 50% expensing will disappear. Small businesses can normally expense (rather than slowly-deduct, or “depreciate&#8221 equipment purchases up to $250,000. This will be cut all the way down to $25,000. Larger businesses can expense half of their purchases of equipment. In January of 2011, all of it will have to be “depreciated.”
  
  Taxes will be raised on all types of businesses. There are literally scores of tax hikes on business that will take place. The biggest is the loss of the “research and experimentation tax credit,” but there are many, many others. Combining high marginal tax rates with the loss of this tax relief will cost jobs.
  
  Tax Benefits for Education and Teaching Reduced. The deduction for tuition and fees will not be available. Tax credits for education will be limited. Teachers will no longer be able to deduct classroom expenses. Coverdell Education Savings Accounts will be cut. Employer-provided educational assistance is curtailed. The student loan interest deduction will be disallowed for hundreds of thousands of families.
  
  Charitable Contributions from IRAs no longer allowed. Under current law, a retired person with an IRA can contribute up to $100,000 per year directly to a charity from their IRA. This contribution also counts toward an annual “required minimum distribution.” This ability will no longer be there.
  
  
  ............ No doubt the worst possible path to take imaginable. The radical leftists have already damaged and burdened this country so badly and so quickly, and now we face massive tax increases that will deliver the final crippling blow. How can we continue to penalize the taxpayers, the workers, the producers just so government can grow and grow and grow and grow ???????????????????? Change we can believe in ................

  I'm sure you didn't write this yourself...If you did, then I apologize. How about a link to this...especially given all of the inaccuracies. Thanks.
• LJ

  

  Footwedge;409025 wrote:I'm sure you didn't write this yourself...If you did, then I apologize. How about a link to this...especially given all of the inaccuracies. Thanks.

  
  the link is at the top of the post
• majorspark

  

  The child tax credit will be cut in half from $1000 to $500 per child. The standard deduction will no longer be doubled for married couples relative to the single level. The dependent care and adoption tax credits will be cut.

  This one will hit middle class Americans with children hard. It is a credit that comes straight off the federal tax you owe. So if you have say 3 children you will be paying the feds $1,500 more, just for starters.
• majorspark

  

  BCBulldog;408908 wrote:I will always oppose tax increases at the federal level unless the revenue generated (if there is any - Laffer curve) is used strictly to pay off the national debt. Not for the expansion of government. Since we know who is in charge, there is no doubt that the debt will only expand further. If we are going to maintain this crippling deficit spending, I would at least like to see it occur for the purpose of tax relief. At least that has a chance of actually stimulation the economy.

  
  This. If the feds could commit to cutting spending and balancing budgets, fine. But we all know that isn't happening.
• tk421

  

  Exactly. Any and all money they get in an increased tax rate will be promptly spent and then some. The government isn't cutting back a thing.
• QuakerOats

  ptown_trojans_1;408984 wrote:I don't mind paying taxes, shelled out $500 this year. Taxes should go up as spending goes down to help balance the budget and end the overall debt. We should all have to pay now for the negligence of both parties the last 20 years.

  I do mind paying taxes, especially for a government that is completely out of control. I am not paying any more.
  
  Government needs to be CUT by 20% minimum, and the budget will balance itself.
  
  Beyond that, we need pro-growth policies that will lift the economy out of recession and provide even more revenues to the treasury that could pay down the debt, excpet that the government is controlled by radical leftists who will only continue to grow government and piss away the tax receipts.
  
  You can pay more if you want; I am finished, and I will be at a Tea Party this weekend.
• tk421

  

  ptown_trojans_1;408984 wrote:I thought the tax rate was going back to the level of the 90s, which to me, was an alright time in our economy.
  
  I don't mind paying taxes, shelled out $500 this year. Taxes should go up as spending goes down to help balance the budget and end the overall debt. We should all have to pay now for the negligence of both parties the last 20 years.

  
  I can't believe you can be so naive. If you honestly think that our government is going to cut spending and pay down the debt with the tax increases, I have some land in Alaska I want to sell. You've got to be kidding.
• jmog

  Footwedge;409020 wrote:Huh? You do understand that Republicans have spent a lot more than Democrats have right? At least they have per year over the past 3 decades.

  
  Sorry, but no R has spend more than Obama has in the last 1.5 years.
• majorspark

  

  Footwedge;409020 wrote:Huh? You do understand that Republicans have spent a lot more than Democrats have right? At least they have per year over the past 3 decades.

  He did not say anything about democrats or republicans. And he is right the ones that happen to be in charge now will expand it and will continue to do so.
  
  Congress gets most of the blame when it comes to spending. Especially the house of representatives. All spending bill must originate there. They have the power of the purse and rarely zip it shut.
• Footwedge

  majorspark;409176 wrote:He did not say anything about democrats or republicans. And he is right the ones that happen to be in charge now will expand it and will continue to do so.
  
  Congress gets most of the blame when it comes to spending. Especially the house of representatives. All spending bill must originate there. They have the power of the purse and rarely zip it shut.

  He inferred that this group will spend more. And history shows that he is wrong. Moreover, only a fool would come to the conclusion that McCain would have spent less. In fact, I personally think McCain would have spent more. Whether you believe in Keynesian philosophy or not, the model has been used EVERY TIME during a "power outage" of the economy. FDR started it...Reagan used it, Bush 1 used it. Carter used it, And Bush 2 used it. As for where spending bills originate, many are originated on the president's direction. And finally.....over 98% of all bills passed into legislation are in fact signed into law by the president. Can't remember the last time a bill had a veto overr ridden by Congress.
• Footwedge

  jmog;409159 wrote:Sorry, but no R has spend more than Obama has in the last 1.5 years.

  Actually, Bush did. Now granted that was over a longer time period. As a percentage, you might want to look up Reagan. He spent more per year on a percentage basis. And BTW, I'm not defending the outrageous spending that Obama is doing. He is a fool for doing what he's doing. But as long as he allows an annual budget of 1 trillion for defense purposes, the uncontrolled spiral will continue.
• Con_Alma

  There has never been a President, be he Republican or Democrat, that has approved the expenditure of either this amount or this amount above governmental receipts within the respective amount of time that the current President has.
• Footwedge

  Con_Alma;409248 wrote:There has never been a President, be he Republican or Democrat, that has approved the expenditure of either this amount or this amount above governmental receipts within the respective amount of time that the current President has.

  
  Not dollar wise...but Reagan did percentage wise. Do you need a link?
• Footwedge

  Here is a chart that only goes from 1980 up to 2007. So I will dig a little further. But spending as a percentage of GDP reveals awfully damning evidence that somehow the GOP is more fiscally responsible. The only one that showed any restraint was Clinton.
  
  We'll never know...but I believe that McCain would have outspent Obama....history has a way of repeating itself.
  
  http://perotcharts.com/2008/05/us-government-spending-as-a-percentage-of-gross-domestic-product-1980-2007/
• Writerbuckeye

  

  Over the last 100 years, Democrats have been in charge of Congress FAR more than Republicans.
  
  It's not even close.
  
  Our nation's debt has been a cumulative process and both parties have been complicit -- but the Democrats have had the power of the checkbook far more often than the Republicans have, and they've USED it more liberally (pun intended).
  
  The most egregious example of this has been the UNPRECEDENTED amount of spending this Democrat-controlled Congress has spent during the past four years (since they regained control from one of the few times Republicans had control).
  
  Democrats should never --- EVER -- be at the forefront of criticizing anyone when it comes to controlling budgets. They've had far more opportunities to do it and failed.
• believer

  

  If the Feds don't radically cut spending while simultaneously allowing these tax cuts to expire you can be sure that the economy will continue to tank. We could transition from the "Great Recession" to the Great Depression II in a hurry.
  
  When Americans across-the-board get slapped with these hikes the current Tea Party Movement will seem tame.
  
  But - hey - Nancy Pelosi thinks that if enough of us collect unemployment checks the economy will boom so what the hell do I know?