Six Months to Go Until The Largest Tax Hikes in History

[wetaline]

To all of the people who voted for Obama. Here's one of the ways he's paying for the bailout and Obama Care. You wanted change? Now you have it!!!! It's a fact, read it and weep.

 

 

This comes straight from:

 

The Joint Committee on Taxation

1015 Longworth House Office Building

Washington, DC. 20515

 

Subject: Six Months to Go Until The Largest Tax Hikes in History

 

 

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.

[mcurtiss]

the estate tax mess has zero to do with obama but with congress sitting on their hands.

 

they new about the 2010 sunset for years and did nothing about it.

[wetaline]

the dems have been in control of the Congress for what..3 years or so?? and Obama has done nothing to help the situation.

[mcurtiss]

the dems have been in control of the Congress for what..3 years or so?? and Obama has done nothing to help the situation.

 

the sunset has been known of since 2001.

[quan808]

the estate tax mess has zero to do with obama but with congress sitting on their hands.

 

they new about the 2010 sunset for years and did nothing about it.

 

 

the sunset has been known of since 2001.

 

So what you are saying is that a Democratic controlled Congress is just sitting on their hands . They did have 3 years to act did they not?

[wetaline]

So what you are saying is that a Democratic controlled Congress is just sitting on their hands . They did have 3 years to act did they not?

 

on the money!

 

When will we instate term limits? get rid of the dead wood come November

[RJ]

mcurtiss - "the sunset has been known of since 2001."

 

Yep! That was when congress passed it. The Republicans have been trying to extend it since 2006. The Democrat majority in Congress has not allow their request to get out of committee. Psst! It takes both Houses of Congress to pass a motion. And then a President too sign the Bill into Law.

 

What part of political obstruction don't you understand? The Dems will allow this Tax Cut to die and then I suppose you will blame it on Bush,the man who signed the bill shortly after the 9/11 attack and it helped generate a quicker economic response in the US economy. 8 months after it went into effect, the US generated 850,000 new private sector jobs in a single month.

[mcurtiss]

i lay none of this on bush but on all of Congress who were negligent in allowing the estate tax to get to this state. I'll go back on my second post a bit and lay some of the blame on Obama for not making it a priority in the last 2 years, but the fact remains that congress (rep majorities from 2001 until 2007, dem since 2007) has been sitting on their hands. they knew it was coming and did nothing.

[iphish]

i lay none of this on bush but on all of Congress who were negligent in allowing the estate tax to get to this state. I'll go back on my second post a bit and lay some of the blame on Obama for not making it a priority in the last 2 years, but the fact remains that congress (rep majorities from 2001 until 2007, dem since 2007) has been sitting on their hands. they knew it was coming and did nothing.

 

 

I have a funny feeling this is going to die, and then thru devine intervention in a timely fashion, be remamed, rebadged into a Obama fast track law right before the election of 2012.

 

Along with the koom by yas, the annoited one will point out that George Bush let it fail, and it was "my"** job to keep it going for the american people.

 

 

** because it's all about him afterall.

[mcurtiss]

I have a funny feeling this is going to die, and then thru devine intervention in a timely fashion, be remamed, rebadged into a Obama fast track law right before the election of 2012.

 

 

Along with the koom by yas, the annoited one will point out that George Bush let it fail, and it was "my"** job to keep it going for the american people.

 

 

** because it's all about him afterall.

 

its all very easy. a one year fix with a 5M exemption, top rate of 45%. i can't believe that can't done within 6 months. then get a comprehensive bill next year.

[Little]

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.

There are people on SOL that actually SUPPORT this tax, thats what scares me.

We have lots of bad taxes in the USA, but this one is the absolute worst.

This is insane.

[DJ Jaws]

on the money!

 

When will we instate term limits? get rid of the dead wood come November

 

 

We have term limits every November. The problem is that we have too many stupid people and too many people on the gov't meal ticket to get rid of these clowns.