Six Months to Go Until The Largest Tax Hikes in History

From Ryan Ellis on Thursday, July 1, 2010 4:15 PM

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.

AMERICANS FOR TAX REFORM

Obama's Lullaby to the Nation

The American Tax Payer

Tax his land, Tax his bed, Tax the table At which he’s fed.

Tax his tractor, Tax his mule, Teach him taxes Are the rule.

Tax his work, Tax his pay, He works for peanuts Anyway!

Tax his cow, Tax his goat, Tax his pants, Tax his coat.

Tax his ties, Tax his shirt, Tax his work, Tax his dirt.

Tax his tobacco, Tax his drink, Tax him if he Tries to think.

Tax his cigars, Tax his beers, If he cries Tax his tears.

Tax his car, Tax his gas, Find other ways To tax his ass.

Tax all he has Then let him know That you won’t be done Till he has no dough.

When he screams and hollers, Then tax him more, Tax him till He’s good and sore.

Then tax his coffin, Tax his grave, Tax the sod in Which he’s laid.

Put these words upon his tomb, ’Taxes drove me to my doom...’

When he’s gone, Do not relax, It’s time to apply The inheritance tax.

Accounts Receivable Tax Building Permit Tax CDL license Tax Cigarette Tax Corporate Income Tax Dog License Tax Excise Taxes Federal Income Tax Federal Unemployment Tax (FUTA) Fishing License Tax Food License Tax Fuel Permit Tax Gasoline Tax (42 cents per gallon and climbing) Gross Receipts Tax Hunting License Tax Inheritance Tax Inventory Tax IRS Interest Charges IRS Penalties (tax on top of tax) Liquor Tax Luxury Taxes Marriage License Tax Medicare Tax Personal Property Tax Privilege Tax Property Tax Real Estate Tax Service Charge Tax Social Security Tax Road Usage Tax Sales Tax Recreational Vehicle Tax School Tax State Income Tax State Unemployment Tax (SUTA) Telephone Federal Excise Tax Telephone Federal Universal Service Fee Tax Telephone Federal, State and Local Surcharge Taxes Telephone Minimum Usage Surcharge Tax Telephone Recurring and Non-recurring Charges Tax Telephone State and Local Tax Telephone Usage Charge Tax Use Tax Utility Taxes Vehicle License Registration Tax Vehicle Sales Tax Watercraft Registration Tax Well Permit Tax Workers Compensation Tax

Not one of these taxes existed 100 years ago, and our nation was the most prosperous in the world. We had absolutely no national debt, had the largest middle class in the world, and Mom stayed home to raise the kids What in the hell happened? Can you spell ’politicians’! And I still have to "press one" for English .

I hope this goes around the United States of America at least a hundred times. You can help it get there. After you send it, write your congressman and let him or her know how much you object to their spending us and our great grandchildren into government slavery.

Here are the issues that Hillary Clinton is both FOR and AGAINST (simultaneously!)

Behind the Hillary Clinton Doubletalk

Monday, November 5, 2007 9:14 PM

By: Dick Morris


Every time she approaches a microphone, Sen. Hillary Rodham Clinton labors under the necessity of fudging on her program - offering, instead, an artificial personality and a variety of poll-tested bromides that let her duck key issues.


The resulting circumlocutions were evident in Tuesday night's Democratic debate. Her plans for Social Security? Clearly, she thinks she may need to raise Social Security taxes - but she can't say so. Instead, she repeats the poll-tested mantra of "fiscal responsibility" and a "bipartisan commission."


By "fiscal responsibility," she means ending Treasury borrowing from the Social Security Trust Fund, a policy already in place. By a "bipartisan commission," she means sharing the blame for unpopular policies with Republicans to minimize the deadly electoral impact. But she can't explain any of that, so she just repeats the mantra.


How about Iraq? Obviously, she doesn't plan to pull out. As she said in a newspaper interview before the presidential race really got under way, she recognizes that we need to keep troops there to train and support the Iraqi army, patrol the border with Iran and hunt al Qaeda in the provinces.


But she can't say that without getting chewed up by the Democratic left. So she speaks about the logistical impossibility of an immediate withdrawal and acts as if the force she would leave to pursue these missions would be minimal - even though she knows that Pentagon plans put the troops needed for even these limited missions at upward of 80,000.


Health-care reform? Her program of extending insurance to illegal immigrants and others who aren't now insured will trigger a massive increase in the demand for medical services. The result would be a steep price rise that would force rationing of health care, particularly for the elderly. But she mustn't say any of that - so she pretends that her health-care prescription is just a band-aid to cover the nagging little problem of 50 million uninsured and that her solution won't bother anybody else.


Driver's licenses for illegal immigrants? Certainly, she favors them. During her husband's administration, she helped kill proposals to ban them. In the Senate, she voted against prohibiting them. But she can't say so without seeming to be soft on terror, so she temporizes, expressing sympathy - but not support - for the plan.


A day after the other Democrats battered her over the issue in the debate, she released a statement of "general" support for Gov. Spitzer's goal of making illegal immigrants eligible for driver's licenses in New York. But, once again, a la Hillary, she sent confusing signals by stating that she hadn't studied it and wasn't "endorsing" any plan. So she's apparently for it but not for it. Get it?


The Alternative Minimum Tax? Bill Clinton vetoed legislation to repeal it in 1999. She voted against repealing it in 2006. She likely intends to limit or terminate it once she's elected, but only in return for other massive tax hikes in its place. But, again, she has to criticize the tax because of her need to attract middle-class voters and speak of opposing a "trillion-dollar" tax increase on them.


Iran? Thinking ahead to the general election, she must show toughness on terrorism. To court Jewish voters, in particular, she needs to stand up to Iranian nuclear ambitions. But, in the primary, she can't be seen to be too far to the right on the issue, so she speaks of "diplomacy" and of opposing a "rush to war." As Frederick the Great said, "Diplomacy without military might is like music without instruments." She knows this full well, but she can't mention the word "military" without forfeiting liberal votes in the primaries.


On issue after issue, Hillary mustn't let voters know what she plans or what she wants to do. That's the difficulty in being Hillary.


© 2007 Dick Morris & Eileen McGann