In just five months, on January 1, 2011, 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, here's what happens... (read it to the end, so you see all three waves)...
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; that represents a 50% increase on the poorest taxpayers!
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 only, there is no death tax. (It's a quirk!) 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, a business, a retirement account , could easily pass along a death tax bill to their loved ones. Think of the farmers who don't make much money, but their land, which they purchased years ago with after-tax dollars, is now worth a lot of money. Their children will have to sell the farm, which may be their livelihood, just to pay the estate tax if they don't have the cash sitting around to pay the tax. Think about your own family's assets. Maybe your family owns real estate, or a business that doesn't make much money, but the building and equipment are worth $1 million. Upon their death, you can inherit the $1 million business tax free, but if they own a home, stock, cash worth $500K on top of the $1 million business, then you will owe the government $275,000 cash! That's 55% of the value of the assets over $1 million! Do you have that kind of cash sitting around waiting to pay the estate tax?
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 not be used to pay for this type of special n eeds education.
The HSA (Health Savings Account) 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. p
Third Wave:
The Alternative Minimum Tax (AMT) 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 currently 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.
And worse yet?
Now, your insurance will be INCOME on your W2's!
One of the surprises we'll find come next year, is what follows - - a little "surprise" that 99% of us had no idea was included in the "new and improved" healthcare legislation . . . thedupes, er, dopes, who backed this administration will be astonished!
Starting in 2011, (next year folks), your W-2 tax form sent by your employer will be increased to show the value of whatever health insurance you are given by the company. It does notmatter if that's a private concern or governmental body of some sort.
If you're retired? So what... your gross will go up by the amount of insurance you get.
You will be required to pay taxes on a large sum of money that you have never seen. Take your tax form you just finished and see what $15,000 or $20,000 additional gross does to yourtax debt. That's what you'll pay next year.
For many, it also puts you into a new higher bracket so it's even worse.
This is how the government is going to buy insurance for the15% that don't have insurance and it's only part of the tax increases.
Who voted FOR these tax hikes, and WHO voted against this Plan?
This tax plan was voted for in March 2001 to allow $1.6trillion tax cut to expire. The Vote??? Ten Democrats and one independent joined every Republican to vote this Tax Plan!
The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness. John Kenneth Galbraith
The tax increase MT posted and we are discussing in this thread, is the Bush Tax Cut Disaster for the Rich, passed by the Republicans in 2001.
The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness. John Kenneth Galbraith
One of the surprises we'll find come next year, is what follows - - a little "surprise" that 99% of us had no idea was included in the "new and improved" healthcare legislation . . . thedupes, er, dopes, who backed this administration will be astonished!
Starting in 2011, (next year folks), your W-2 tax form sent by your employer will be increased to show the value of whatever health insurance you are given by the company. It does notmatter if that's a private concern or governmental body of some sort.
If you're retired? So what... your gross will go up by the amount of insurance you get.
You will be required to pay taxes on a large sum of money that you have never seen. Take your tax form you just finished and see what $15,000 or $20,000 additional gross does to yourtax debt. That's what you'll pay next year.
For many, it also puts you into a new higher bracket so it's even worse.
This is how the government is going to buy insurance for the15% that don't have insurance and it's only part of the tax increases.
Fortunately this is NOT TRUE. It will be required that the cost of heath benefits be reported on your W2, it is not taxed...YET!
We are on the continued slow march to socialism and socialized medicine.
Cicero, you are correct. This is not true............YET!
When the INSANE are running the ASYLUM In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. -- Friedrich Nietzsche
“How fortunate for those in power that people never think.” Adolph Hitler
The tax increase MT posted and we are discussing in this thread, is the Bush Tax Cut Disaster for the Rich, passed by the Republicans in 2001.
So................the tax cuts, be it for the rich or not, that apparently worked, is now being reversed? Why? To pay for obama's reckless spending! Obama and crew had NO CHOICE, but to reverse the bush cuts to pay for their socialist agenda.
When the INSANE are running the ASYLUM In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. -- Friedrich Nietzsche
“How fortunate for those in power that people never think.” Adolph Hitler
So................the tax cuts, be it for the rich or not, that apparently worked
Worked???
WORKED???
W O R K E D ? ? ? Are you F'n Kidding me???
They caused the Bush Economic Meldtown that is still continuing today!
Without the Bush & Obama Stimulus Packages, the entire world may have been in Recession! WORKED?
WORKED??? They almost ended the United States Of America!
The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness. John Kenneth Galbraith
They caused the Bush Economic Meldtown that is still continuing today!
Without the Bush & Obama Stimulus Packages, the entire world may have been in Recession! WORKED?
WORKED??? They almost ended the United States Of America!
No...Government threatening banks to give loans to people to buy homes that didn't have the means to afford was the cause of the economic meltdown. Which I agree, was part of the Bush/Frank/Dodd platform
Government taking the fruits of ones labor through taxation causes economic meltdowns.
Bernanke: Fed will take action if economy falters By JEANNINE AVERSA, AP Economics Writer Jeannine Aversa, Ap Economics Writer 3 mins ago
JACKSON, Wyo. – Federal Reserve Chairman Ben Bernanke said Friday that the Fed will consider making another large-scale purchase of securities if the slowing economy were to deteriorate significantly and signs of deflation were to flare.
Bernanke acknowledged that the recent pace of growth is "less vigorous than we expected." He described the outlook as uncertain and said the economy "remains vulnerable to unexpected developments."
At the same time, he said growth is likely to pick up next year. He downplayed the odds of another recession, even after a series of dismal reports on housing and manufacturing this week stoked fears that the economy may be on the verge of another downturn.
His remarks came 90 minutes after the government said the economic growth slowed sharply in the second quarter to a 1.6 percent pace.
Bernanke stopped short of committing to any specific action. But he raised the prospect of another Fed purchase of securities, most likely government debt or mortgage securities, to drive down rates on mortgages and other debt to spur more spending by Americans.
"I believe that additional purchases of longer-term securities should the FOMC choose to undertake them, would be effective in further easing financial conditions,"he said. The FOMC stands for the Federal Open Market Committee, the group of Fed policymakers that makes decisions on interest rates and other steps to aid the economy.
The other two options he laid out are:
_Providing more information in the Fed's post-meeting policy statements about how long Fed policymakers would continue to keep rates at record lows. For more than a year, the Fed has been pledging to hold rates at ultra-low levels for an "extended period."
• Cutting to zero the interest the Fed pays for banks to keep money parked at the Fed. That rate is now 0.25 percent.
"The issue at this stage is not whether we have the tools to help support economic activity and guard against disinflation. We do," Bernanke said. "The issue is instead whether, at any given juncture, the benefits of each tool, in terms of additional stimulus, outweigh the associated costs or risks of using each tool."
Investors appeared to be pleased by Bernanke's remarks. The Dow Jones industrial average rose 114 points in early trading. Broader indexes were also up.
Brian Bethune, economist at IHS Global Insight, said the Fed is right to hold off until it becomes clear that the weakening trend in the U.S. economy is persisting. If the economy shrinks in the third quarter, he said, the central bank's hand would be forced.
"I think they'd have to make a move," he said.
The Fed's strategy carries no guarantees. Short-term interest rates near zero have yet to rejuvenate the economy. The benefits of federal stimulus programs are fading, and Congress has declined to pass any major new economic aid. That is putting immense pressure on Bernanke to provide relief, and he has no easy options for fixing the economy.
At a Fed meeting earlier this month, Bernanke persuade his colleagues to use a relatively small amount of money generated by its portfolio of mortgage securities to buy government debt. The goal is to further ease rates on mortgages and other loans.
The economy, which has been losing momentum all year, slowed to a near crawl in the second quarter.
At such a weak pace, the nation's 9.5 percent unemployment rate could climb and pass 10 percent later this year or early next year, some analysts say. With economic conditions worsening, there's the danger that consumers and businesses will turn even more cautious in their spending, causing the economy to stall, or worse, slip into reverse.
Bernanke said the prospect of high unemployment for a long period is a central concern for the Fed. He also made clear that he is determined to prevent the United States from slipping into a deflationary spiral.
Deflation is a widespread and prolonged drop in wages, the prices of goods and services and in the value of stocks, houses and other assets. The country's last serious episode of deflation was in the 1930s. Keeping interest rates super low and taking unconventional to lower rates on mortgages and other debt is a way to nip any deflationary forces.
Japan's deflation problems and stagnant growth caused the country to suffer what many refer to as a "lost decade" in the 1990s. It is still fighting deflation now even as it has kept its key interest rates near zero like the Fed.
Although most economists believe the odds are relatively low that the United States will slide into deflation, it can't be ruled out given the economy's weak growth, they say.
Despite the economy's recent slowing, Bernanke, however, continues to believe there will be "some pickup" in growth in 2011, but not enough to substantially drive down unemployment and reduce the vast ranks of the unemployed.
"We have come a long way, but there is still some way to travel," Bernanke said.
When the INSANE are running the ASYLUM In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. -- Friedrich Nietzsche
“How fortunate for those in power that people never think.” Adolph Hitler
The housing bubble courtesy of Freddie and Fannie started the economic meltdown that lead to the meltdown of the financial system when AIG, and the big banks were left with worthless mortgages that people couldn't pay. The world should have gone into a recession because that's how things work when you don't use sound financial policies and gamble on investments you go bankrupt when things don't go the way you planned. Maybe next time these same institutions will develop sound policies to prevent them from making the same mistake again. These companies now think I can do what ever I want and the government will bail me out if I get into financial trouble. At no time in history has any country spent their way out of debt and I don't think that we'll be the first one to do so.
At no time in history has any country spent their way out of debt and I don't think that we'll be the first one to do so.
they will blame it on bush!
Boxy has yet to admit that both bush and obama were and are unqualified for the job!!!
If bush is to blame for starting this mess, obama, pelosi, reid, frank, benake are clearly not handling it correctly!! YOU DON'T RAISE TAXES, IMPLEMENT A HEALTHCARE BEAST AND SPEND YOUR WAY OUT OF DEBT!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Any half brained economist will tell ya that!!!
Take a course in ECONOMICS 101!!
When the INSANE are running the ASYLUM In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. -- Friedrich Nietzsche
“How fortunate for those in power that people never think.” Adolph Hitler
The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness. John Kenneth Galbraith
As I remember Barack Obama campaigned on getting elected because he had the solutions to the problems of this country. As it turns out Obama didn't have a clue of what to do about anything but redistribute other peoples wealth to the lobbyists, special interest groups, unions, Acorn, and all the rest of the organizations who got him elected. He's an arrogant elitist who can't accept his failures and his only recourse is to blame others for his failures. When only 8% of the people who are advising you have ever had a real job you're in way over your head.
As I remember Barack Obama campaigned on getting elected because he had the solutions to the problems of this country. As it turns out Obama didn't have a clue of what to do about anything but redistribute other peoples wealth...
The largest 'redistribution of wealth' in this country is the $1.6Billion dollar Tax Cut for the Rich. Do just one thing... just eliminate the Tax cut for the Rich in 2001, and the country's economy would be fine.
Bush bankrupt the USA.
The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness. John Kenneth Galbraith
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