Biggest tax hikes in history coming 1/1/11

BOHICA time, folks. According to this piece from Americans for Tax Reform, three waves of tax increases will hit American taxpayers like a tsunami.

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).
  • Higher taxes on marriage and family. The “marriage penalty” (narrower tax brackets for married couples) will return from the first dollar of income.
  • 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.
  • 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).
  • 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 AMT will ensnare over 28 million families, up from 4 million last year. 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
  • Taxes will be raised on all types of businesses. There are literally scores of tax hikes on business that will take place
  • Tax Benefits for Education and Teaching Reduced. The deduction for tuition and fees will not be available
  • Charitable Contributions from IRAs no longer allowed.

These tax changes and increases will hit everyone – not just those earning over $200K per year. Business taxes will simply be passed along to the consumers since businesses don’t pay taxes.

BOHICA!

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3 Responses to “Biggest tax hikes in history coming 1/1/11”

  1. Someone has to pay for Bush’s Guys Mess.

    It will lower the dificent ?

    • Hmmm… Not sure where to start with this but let’s see.

      So this is Bush’s fault? Well, he wasn’t afraid to spend, I would agree with that. The only problem here is the president can only veto, suggest, or request spending. The actual purse strings are controlled by congress so the real blame lies there. And who has been in control of those purse strings since 2006? The democrats. Not that the republicans are a bunch of spendthrifts, but the democrats have really turned the spigots up to full volume. And our dear comrade leader is right there with them. One thing we need to get straight: our deficit problem is not a revenue problem – it’s a SPENDING problem. More and higher taxes will not reduce the deficit – this has been proven over and over again. Hell, even JFK knew this. To say this is Bush’s fault is terribly naive and downright disingenuous.

      The point of my post is that allowing the Bush tax cuts to expire will raise taxes across the board on all income levels. One of the major promises during our dear comrade leader’s campaign was that if you made less than $200K/yr, your taxes would not go up one penny. If these tax cuts are allowed to expire, EVERYONE’S taxes will go up – even yours, phil. So that promise was a f**king lie – just like about everything else that comes out of the comrade’s mouth.

      Now if you’re thinking about arguing that the expiration of the tax cuts was built in to the plan so that’s Bush’s fault too, you might just want to read up on that. The expiration was a compromise to get the democrats to support the tax cut legislation. THEY INSISTED on an expiration.

      Don’t you think the “Bush’s fault” thing is wearing a little thin? I mean he’s been gone for 18 months.

      Wake up, phil – your government is f**king you – and you seem to be either oblivious, or enjoying it…

  2. […] Biggest tax hikes in history coming 1/1/11 « Da Mook […]

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