We are a commune of inquiring, skeptical, politically centrist, capitalist, anglophile, traditionalist New England Yankee humans, humanoids, and animals with many interests beyond and above politics. Each of us has had a high-school education (or GED), but all had ADD so didn't pay attention very well, especially the dogs. Each one of us does "try my best to be just like I am," and none of us enjoys working for others, including for Maggie, from whom we receive neither a nickel nor a dime. Freedom from nags, cranks, government, do-gooders, control-freaks and idiots is all that we ask for.
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Friday, October 1. 2010
In just three 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)...
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 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.
There are over twenty new or higher taxes in Obamacare. Several will first go into effect on Jan uary 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 a re 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.
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 . . . the dupes, 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 not matter 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 your tax 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.
Not believing this??? Here is a research of the summaries.....
On page 25 of 29: TITLE IX REVENUE PROVISIONS- SUBTITLE A: REVENUE OFFSET PROVISIONS-(sec. 9001,
as modified by sec. 10901) Sec.9002 "requires employers to include in the W-2 form of each employee the aggregate cost of applicable employer sponsored group health coverage that is excludable from the employees gross income."
- Joan Pryde is the senior tax editor for the Kiplinger letters.
- Go to Kiplingers and read about 13 tax changes that could affect you. Number 3 is what is above.
Display comments as (Linear | Threaded)
Is that a requirement to add it to gross compensation, or just to list it as a broken-out dollar value (i.e. - one of the 'letter' amounts - similar to non-taxable 401K/IRA contributions)? I suspect it's the latter, but am willing to be corrected by further information.
If they are adding it to gross compensation, that certainly ought to add 10-15% to the Obamacare unfavorable percentage in short order, since it would have to be included in the paycheck withholding calculations for us wage slaves almost immediately.
Must get gun. Must get ammo. Must disappear.
What unadulterated bullshit. Why should the Bush tax cuts be an all-or-none choice? I guess you're in favor of holding everyone hostage so that people earning $200K+ can enjoy the lowest tax rates for the rich of any industrialized nation on the globe.
Just think about the world peace, social justice, and humane benefits we will all receive as a result of paying these taxes. Don't forget that! All that money will be carefully spent to improve our lives, so it will be worth it. Besides, think of all the time you will save preparing your taxes if you don't have to worry about all those standard deductions and stuff. Just calculate the AMT and take a break for beer or cocktails!
I'm sorry, where is the BS?
The facts are clear. What The Barrister has listed is the tax increases that will occur on January 1 of next year. The Barrister never said anything to indicate that all of these former tax cuts should be reinstated. You read that in yourself. Transference much?
I make far less than $100k (less than half of your magical $200k number), and my tax liability will go through the roof next year. I don't feel like being held hostage to idiots who choose to sit on their butts and do nothing, but expect me to make their lives better.
Don't forget to add on to that all the nastiness your State and local governments are likely to do to you once the elections are over.
And my annual medical premiums have already gone up $2,000 because of Obamacare, with another wave of increases to come early next year.
'bama would be stopped in a week if this article were on the front page of even a handful of major news papers across the USA. Out of the mouths of idiots sometimes comes the voice of truth; well, we'll have to pass the health care bill to find out what's in it? Vote in Novermber, vote twice maybe?
If Obama is foreign born, then maybe one reason he was put into office was to dumb us down a little so we won't raise as much of an uproar when Schwarznegger gets into office. Probably republican. And unlike the movie 'Demolition Man', there won't be any heroes to save us from the 'terminator'. And when his first term is over, he raise the 'hail Satan' hand sign and rant "Asta lavista baby". Then, just as he is about to walk off stage, he will suddenly turn and say, "I'll be back." (second term election). He is a good actor. He can BS you quite well. And while a lot of the country is being hood winked about the 2012 scare, which will turn out to be another y2k, the economy just goes straight to Hell. (no pun intended). Not to mention the Draconian health care bill laws that says that in (2014 ? ) or sometime, IF YOU DON'T HAVE HEALTH CARE, THEN YOU PAY A FINE. The average person will be swamped by that. The business pays more for your health care. If they don't provide health care coverage, then they pay the fine. WHICH IS CHEAPER FOR THE COMPANY ? PAY FOR YOUR HEALTH CARE, OR PAY THE FINE ? AND THE EMPLOYEE WILL HAVE TO BUY HIS OWN HEALTH CARE OR PAY A FINE. WHICH IS CHEAPER ? HEALTH CARE COVERAGE OR THE FINE ? Hmmmm. Also I heard recently on the Alex Jones show that there is a new law which bans the selling, exchanging, and selling of home grown food. (SO MUCH FOR COMMUNITY FARMS). Also on this site, a law that could take vitamins off the shelves (prescription only) and make homeopathic remedies illegal. (WTF). That is to put it politely.