Harmor
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+605|6519|San Diego, CA, USA
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Six Months to Go Until The Largest Tax Hikes in History

ATR wrote:

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.
Source: http://www.atr.org/six-months-untilbr-l … ikes-a5171

PDF Version: http://www.atr.org/files/files/070110pr … 1taxes.pdf

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I'd tell you one thing that I'm not looking forward to all these higher taxes in the middle of probably the worst economic downturn we have seen in 30 years.  The Democrats would do a lot of justice to extended or make permanent the Bush tax cuts to help the over, what 15 million people who are currently unemployed.
War Man
Australians are hermaphrodites.
+563|6684|Purplicious Wisconsin
Great............

Last edited by War Man (2010-07-01 22:18:54)

The irony of guns, is that they can save lives.
Cybargs
Moderated
+2,285|6687
1.3 trillion dollar deficit.
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Macbeth
Banned
+2,444|5556

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.
Never liked the idea of a death tax. A person works hard their whole life and wants to leave their children or someone else the entire sum of their life's labor but the government goes and takes more than half.

I can't hold it against someone if they decide to try get around and not pay on this one.
Harmor
Error_Name_Not_Found
+605|6519|San Diego, CA, USA

Cybargs wrote:

1.3 trillion dollar deficit.
And government coffers don't expand when taxes go up.  When you tax something you get less of it.  Check the increases in revenue each time a tax decrease occurred in history.

Now only if we could get spending under control...
ATG
Banned
+5,233|6500|Global Command
The article failed to include the bank tax, and God help us, cap and trade.

There are a lot of people that never recovered financially from the Carter era when they jacked interest rates to 30% and stopped all construction.
Reciprocity
Member
+721|6551|the dank(super) side of Oregon
Damn, and we were doing so well right up until he took over.

I've heard enough of this Bush tax cut bullshit.  It they're so vital, why did the economy spin down the shitter?
Cybargs
Moderated
+2,285|6687

Macbeth wrote:

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.
Never liked the idea of a death tax. A person works hard their whole life and wants to leave their children or someone else the entire sum of their life's labor but the government goes and takes more than half.

I can't hold it against someone if they decide to try get around and not pay on this one.
More deaths of older people this year.

Fuck death taxes.
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mcminty
Moderating your content for the Australian Govt.
+879|6692|Sydney, Australia

Cybargs wrote:

1.3 trillion dollar deficit.
Jaekus
I'm the matchstick that you'll never lose
+957|5149|Sydney
Off topic, but wtf?

"in 47 seconds by mcminty"
Spark
liquid fluoride thorium reactor
+874|6645|Canberra, AUS

mcminty wrote:

Cybargs wrote:

1.3 trillion dollar deficit.
The paradox is only a conflict between reality and your feeling what reality ought to be.
~ Richard Feynman
Harmor
Error_Name_Not_Found
+605|6519|San Diego, CA, USA

mcminty wrote:

Cybargs wrote:

1.3 trillion dollar deficit.
And look at what we are getting for it?  Out-of-control wasteful spending is what we have now.

Would you like to add a VAT tax on top of everything else to pay for the spending-spree?
Cybargs
Moderated
+2,285|6687

Harmor wrote:

mcminty wrote:

Cybargs wrote:

1.3 trillion dollar deficit.
And look at what we are getting for it?  Out-of-control wasteful spending is what we have now.

Would you like to add a VAT tax on top of everything else to pay for the spending-spree?
Tax increase and lower spending might help.

But for me, the government is spending way too much money. Cut crony defense contracts first.
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Harmor
Error_Name_Not_Found
+605|6519|San Diego, CA, USA
We should learn from you Aussies...your country is in better shape right now.   Oh, also its 1.54 Trillion, not $1.3 Rillion last I checked.
Cybargs
Moderated
+2,285|6687

Harmor wrote:

We should learn from you Aussies...your country is in better shape right now.   Oh, also its 1.54 Trillion, not $1.3 Rillion last I checked.
One down side is nanny state. Australia pretty much has to thank it's export industries (agriculture and resources mainly). If the US shifts primarily from an importer to an exporter country, things would be better for the US.
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Spark
liquid fluoride thorium reactor
+874|6645|Canberra, AUS

Harmor wrote:

We should learn from you Aussies...your country is in better shape right now.   Oh, also its 1.54 Trillion, not $1.3 Rillion last I checked.
We started this whole thing in a better shape, and we basically did what you did (but better - i.e. stimulus etc.)
The paradox is only a conflict between reality and your feeling what reality ought to be.
~ Richard Feynman
mcminty
Moderating your content for the Australian Govt.
+879|6692|Sydney, Australia

Harmor wrote:

mcminty wrote:

Cybargs wrote:

1.3 trillion dollar deficit.
And look at what we are getting for it?  Out-of-control wasteful spending is what we have now.
I agree that you are getting the raw deal with your government's spending. But the simple fact is that the defecit/surplus = government spending - tax income. Yes you do need to drastically cut ineffective government spending, but taxes will have to go up at some point. Such a massive deficit gives no room to apply economic stimulus via fiscal policy (ie. the government has no money..), while your overnight cash rate of 0-0.25% can't be lowered anymore to stimulate the economy with monetary policy..

Can't have it both ways..
Phrozenbot
Member
+632|6586|do not disturb

mcminty wrote:

Harmor wrote:

mcminty wrote:


And look at what we are getting for it?  Out-of-control wasteful spending is what we have now.
I agree that you are getting the raw deal with your government's spending. But the simple fact is that the defecit/surplus = government spending - tax income. Yes you do need to drastically cut ineffective government spending, but taxes will have to go up at some point. Such a massive deficit gives no room to apply economic stimulus via fiscal policy (ie. the government has no money..), while your overnight cash rate of 0-0.25% can't be lowered anymore to stimulate the economy with monetary policy..

Can't have it both ways..
I can't believe you think an increase in taxes will aid in the reduction of our deficit. The current account deficit and future debt obligations exceeds over $50 trillion. A 10%, 20%, 50%, etc. increase in taxes will have little impact without harming economic growth.

Deficits are almost always from blatant excessive spending, not lack of revenue...
mcminty
Moderating your content for the Australian Govt.
+879|6692|Sydney, Australia
How else do you propose to reduce the deficit?
Reciprocity
Member
+721|6551|the dank(super) side of Oregon
Give tax breaks to the wealthy and that which shall runneth over will trickle down to the little people, like the government.
mcminty
Moderating your content for the Australian Govt.
+879|6692|Sydney, Australia
...
Cybargs
Moderated
+2,285|6687

mcminty wrote:

...
Business tax breaks will help a lot, not exactly to the wealthy tbh.

But cutting spending should be priority no. 1
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Phrozenbot
Member
+632|6586|do not disturb

mcminty wrote:

How else do you propose to reduce the deficit?
Cut spending, drastically. It is not possible to tax revenue to pay for the deficit and future debt from obligations that include, Medicaid, Medicare, and social security. It is just not possible, unless I'm greatly deceived by elementary math.
Phrozenbot
Member
+632|6586|do not disturb

Data, analyze.
mcminty
Moderating your content for the Australian Govt.
+879|6692|Sydney, Australia

Phrozenbot wrote:

mcminty wrote:

How else do you propose to reduce the deficit?
Cut spending, drastically. It is not possible to tax revenue to pay for the deficit and future debt from obligations that include, Medicaid, Medicare, and social security. It is just not possible, unless I'm greatly deceived by elementary math.
Yes, yes, duh. Of course that has to happen. But my point was that until government income > government spending, the deficit will continue to grow.

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