Higher Federal Taxation under Obama...

[Dutchcedar]

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.

h/t Redstate.

Prepare to keep less of your own and if you want to maintain your standards, earn more (or be more "creative" in your accounting).

If you get a paycheck, you might wanna rethink your withholding rates.

Hope and change my arse. Its a countrywide screwin'. Time to get prepared.

[old82]

i can't believe those ### hats raised taxes on the freakin poor. i mean, a lot of people are working crap walmart type jobs nowadays. it was bad enough getting $180 a month taken out of a $1200 a month paycheck, but now these scumbags want more?! are they out of their F#@#### minds?!


and they raised taxes more on the poor than anyone else!


and how exactly do you know whether or not you have to pay that extra 26% for the Alternative Minimum Tax? they better not be putting that on the poor as well.

[kbohip]

and they raised taxes more on the poor than anyone else!

This is impossible as everyone knows the Democrats are the poor man's friends!

Who would have ever thought electing a Chicago political style, community activist, civil rights lawyer to the highest office in the nation could ever turn out bad?

[BlackDragon24]

LOL

Republican Definition: LARGEST TAX HIKES IN AMERICAN HISTORY OMGWTFBBQSAUCE!!!!!

Democratic Definition: Letting the Bush war-time-enacted tax cuts for the rich expire.

In case you guys forgot, Obama campaigned on this stuff 2 years ago. Its not like this was not expected. But thanks for the un-biased PSA

[old82]

um, obama said he'd only raise the tax on the rich. what we're most angry about is him raising taxes on everyone else... and for me, i'm especially pissed that he gave the working poor the highest tax raise of them all. this shows you who this ••••••• really serves.

[AMDScooter]

LOL

Republican Definition: LARGEST TAX HIKES IN AMERICAN HISTORY OMGWTFBBQSAUCE!!!!!

Democratic Definition: Letting the Bush war-time-enacted tax cuts for the rich expire.

In case you guys forgot, Obama campaigned on this stuff 2 years ago. Its not like this was not expected. But thanks for the un-biased PSA

Speaking of forgetting. I see a lot in that article about how the "Big F*cking Deal" is going to raise taxes. Care to chime in on that with your "Democrat definition"? Or should I thank you in advance for your "un-biased PSA "

[BlackDragon24]

um, obama said he'd only raise the tax on the rich. what we're most angry about is him raising taxes on everyone else... and for me, i'm especially pissed that he gave the working poor the highest tax raise of them all. this shows you who this ••••••• really serves.

Yeah but Obama's budget factors this in...conveniently omitted in the OP:



http://www.springfieldnewssun.com/ne...e--646402.html

Or here:

http://www.marketwatch.com/story/oba...ire-2010-02-01

[AMDScooter]

Yeah but Obama's budget factors this in...conveniently omitted in the OP:



http://www.springfieldnewssun.com/ne...e--646402.html

Or here:

http://www.marketwatch.com/story/oba...ire-2010-02-01

Obama's Budget? I'd sure like to see that. Last time I checked all we have to go on for the next year is sum "Deemed as passed" lump.

[BlackDragon24]

Obama's Budget? I'd sure like to see that. Last time I checked all we have to go on for the next year is sum "Deemed as passed" lump.

http://www.whitehouse.gov/omb/budget/

[old82]

i have to admit, i was taken it. i should be more careful.


although i wouldn't be surprised if both parties organized this.


can't really tell, so vote em all out!

[BlackDragon24]

i have to admit, i was taken it. i should be more careful.


although i wouldn't be surprised if both parties organized this.


can't really tell, so vote em all out!

Fair enough

It's Obama's budget, so I doubt its bipartisan. I can't see how any republicans would agree with allowing the tax cuts to expire JUST for the big earners. Kinda goes against their entire ideology.

Just remember old82, just because you don't like the douche-bags in office now doesn't mean it can't get worse. If you think nothing gets done now? Give the republicans control of the house and senate and let them spend the next 2 years tieing up the country with impeachment hearings a la 1998. Think that's what we need right now? Cause that's where were heading.

See I can use the scare tactics as good as anyone heh.

[old82]

remember, this partisan crap is nonsense. all each of them really is is a puppet for whoever pays them the most. this would just be another deal for them.


actually, impeachment and corporate prosecutions would be one of the many things we need. the only problem is it's not going to happen from any of the main streamers.

[AMDScooter]

http://www.whitehouse.gov/omb/budget/

I think you've mistaken another of Obama's speeches as an actual budget... of which we have none. Guess "deemed as passed" is as good as it gets in this "summer of recovery".

As far as things getting worse... I don't know how you could possibly one up the record bamma has managed in 18 months. The Carter years are looking good by comparison. On that note I'd love to tie up Congress for a few years. At least till we can get this man made disaster outta the WH.

[BlackDragon24]

I think you've mistaken another of Obama's speeches as an actual budget... of which we have none. Guess "deemed as passed" is as good as it gets in this "summer of recovery".

As far as things getting worse... I don't know how you could possibly one up the record bamma has managed in 18 months. The Carter years are looking good by comparison. On that note I'd love to tie up Congress for a few years. At least till we can get this man made disaster outta the WH.

The only thing I've mistaken is your ability to click on a link and find the relevant information. So I'll make it easy for you:

http://www.whitehouse.gov/omb/budget...ets/budget.pdf

Doesn't look like a speech to me. And thank you for confirming for me what we've known all along. Republicans are more interested in obstructing the policies of a president (and apparently, impeaching him) who received over 360 electoral votes in the last election. So keep up the good obstructionist work fellas, keep apologizing to BP, and keep letting Michael Steele speak in front of an open microphone

[otoc]

The only thing I've mistaken is your ability to click on a link and find the relevant information. So I'll make it easy for you:

http://www.whitehouse.gov/omb/budget...ets/budget.pdf

Doesn't look like a speech to me. And thank you for confirming for me what we've known all along. Republicans are more interested in obstructing the policies of a president (and apparently, impeaching him) who received over 360 electoral votes in the last election. So keep up the good obstructionist work fellas, keep apologizing to BP, and keep letting Michael Steele speak in front of an open microphone

shh. No one was supposed to see that dutch's first post is what the gop proposes to do with the end dates they themselves voted for in 2001 and 2003. Funny how the first posted list is stated as fact while your post is called a proposal. Can you say filibuster so that Obama can be blamed for raising taxes even though it can't be farther from the reality and the gop teabagger candidates can get all riled up with safety from the smoke screen? Wah wah wah, Obama is going to raise taxes....

...not on the majority of people. But hey, let's focus on the 1% that has done well and stop those unemployment checks because of small business tax breaks included in the package to try to prime the economic pump with jobs.

Can you mention Bush and the recession that he left Obama with because scoot brought up Carter?