Largest Tax Hikes in US History
Posted in the Washington, DC Forum
#1 Sep 21, 2012
Sunday will mark the start of the 100-day countdown to “Taxmageddon”– the date the largest tax hikes in the history of America will take effect. They will hit families and small businesses in three great waves:
First Wave: Expiration of 2001 and 2003 Tax Relief
In 2001 and 2003, the GOP Congress enacted several tax cuts for small business owners, families, and investors. Personal income tax rates will rise on January 1, 2013. The top income tax rate will rise from 35 to 39.6 percent (this is also the rate at which the majority of small business profits are taxed). 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 a new and 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 coming on January 1, 2013. The “marriage penalty” will return from the first dollar of taxable income. The child tax credit will be cut in half from $1000 to $500. The standard deduction will no longer be doubled for married couples relative to the single level.
Middle Class Death Tax returns on January 1, 2013. The death tax is currently 35% with an exemption of $5 million ($10 million for married couples). For those dying on or after January 1 2013, there is a 55 percent top death tax rate on estates over $1 million.
Higher tax rates on savers and investors on January 1, 2013. The capital gains tax will rise from 15 percent this year to 23.8 percent in 2013. This is because of scheduled rate hikes plus Obamacare’s investment surtax.
Second Wave: Obamacare Tax Hikes
There are twenty new or higher taxes in Obamacare. Some have already gone into effect (the tanning tax, the medicine cabinet tax, the HSA withdrawal tax, W-2 health insurance reporting, and the “economic substance doctrine”). Several more will go into effect on January 1, 2013. They include:
The Obamacare Medical Device Tax begins to be assessed on January 1, 2013.
The Obamacare Medicare Payroll Tax Hike takes effect on January 1, 2013. The Medicare payroll tax is currently 2.9 percent on all wages and self-employment profits. Starting in 2013, wages and profits exceeding $200,000 ($250,000 in the case of married couples) will face a 3.8 percent rate.
The Obamacare “Special Needs Kids Tax” comes online on January 1, 2013. Imposes a cap on FSAs of $2500 (now unlimited). Indexed to inflation after 2013. There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children. 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.
The Obamacare “Haircut” for Medical Itemized Deductions goes into force on January 1, 2013. Currently, those facing high medical expenses are allowed a deduction for medical expenses to the extent that those expenses exceed 7.5 percent of adjusted gross income (AGI). Third Wave: The Alternative Minimum Tax and Employer Tax Hikes
When Americans prepare to file their tax returns in January of 2013, they’ll be in for a nasty surprise—the AMT won’t be held harmless, and many tax relief provisions will have expired. These tax increases will be in force for BOTH 2012 and 2013. The major items include:
The AMT will ensnare over 31 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 31 million.
Taxes will be raised on all types of businesses. The biggest is the loss of the “research and experimentation tax credit."
#2 Sep 21, 2012
WASHINGTON (AP)— Nearly 6 million Americans — significantly more than first estimated— will face a tax penalty under President Barack Obama's health overhaul for not getting insurance, congressional analysts said Wednesday. Most would be in the middle class.
The new estimate amounts to an inconvenient fact for the administration, a reminder of what critics see as broken promises.
The numbers from the nonpartisan Congressional Budget Office are 50 percent higher than a previous projection by the same office in 2010, shortly after the law passed. The earlier estimate found 4 million people would be affected in 2016, when the penalty is fully in effect.
That's still only a sliver of the population, given that more than 150 million people currently are covered by employer plans. Nonetheless, in his first campaign for the White House, Obama pledged not to raise taxes on individuals making less than $200,000 a year and couples making less than $250,000.
And the budget office analysis found that nearly 80 percent of those who'll face the penalty would be making up to or less than five times the federal poverty level. Currently that would work out to $55,850 or less for an individual and $115,250 or less for a family of four.
Average penalty: about $1,200 in 2016.
"The bad news and broken promises from Obamacare just keep piling up," said Rep. Dave Camp, R-Mich., chairman of the House Ways and Means Committee, who wants to repeal the law.
Starting in 2014, virtually every legal resident of the U.S. will be required to carry health insurance or face a tax penalty, with exemptions for financial hardship, religious objections and certain other circumstances. Most people will not have to worry about the requirement since they already have coverage through employers, government programs like Medicare or by buying their own policies.
A spokeswoman for the Obama administration said 98 percent of Americans will not be affected by the tax penalty — and suggested that those who will be should face up to their civic responsibilities.
#3 Sep 21, 2012
This (analysis) doesn't change the basic fact that the individual responsibility policy will only affect people who can afford health care but choose not to buy it," said Erin Shields Britt of the Health and Human Services Department. "We're no longer going to subsidize the care of those who can afford to buy insurance but make a choice not to buy it."
The budget office said most of the increase in its estimate is due to changes in underlying projections about the economy, incorporating the effects of new federal legislation, as well as higher unemployment and lower wages.
The Supreme Court upheld Obama's law as constitutional in a 5-4 decision this summer, finding that the insurance mandate and the tax penalty enforcing it fall within the power of Congress to impose taxes. The penalty will be collected by the IRS, just like taxes.
The budget office said the penalty will raise $6.9 billion in 2016.
The new law will also provide government aid to help middle-class and low-income households afford coverage, the financial carrot that balances out the penalty.
Nonetheless, some people might still decide to remain uninsured because they object to government mandates or because they feel they would come out ahead financially even if they have to pay the penalty. Health insurance is expensive, with employer-provided family coverage averaging nearly $15,800 a year for a family and $4,300 for a single plan. Indeed, insurance industry experts say the federal penalty may be too low.
The Supreme Court also allowed individual states to opt out of a major Medicaid expansion under the law. The Obama administration says it will exempt low-income people in states that opt out from having to comply with the insurance requirement.
Many Republicans still regard the insurance mandate as unconstitutional and rue the day the Supreme Court upheld it.
However, the idea for an individual insurance requirement comes from Republican health care plans in the 1990s.
It's also a central element of the 2006 Massachusetts health care law signed by then-GOP Gov. Mitt Romney, now running against Obama and promising to repeal the federal law.
Romney spokeswoman Andrea Saul said Wednesday the new report is more evidence that Obama's law is a "costly disaster."
"Even more of the middle-class families who President Obama promised would see no tax increase will in fact see a massive tax increase thanks to Obamacare," she said.
Romney says insurance mandates should be up to each state. The approach seems to have worked well in Massachusetts, with virtually all residents covered and dwindling numbers opting to pay the penalty instead.
#4 Sep 22, 2012
Obama has the deadbeat vote all sewn up.
#5 Sep 22, 2012
Yes they are loving him so!
#6 Sep 23, 2012
Last year Obama only took $400.00 from every tax payer.This year we are faceing a $494 billion dallor tax hike,Jan.1/2013.Call it trickle up or down,the working people will be made to pay this,NOT big business.It will be comeing out of our pockets...
WHY WHY you ask to pay for Obama jackass programs.Turning America into a welfair state..
OBAMA MUST GO GO GO
#7 Sep 23, 2012
Romney for 2012!
#8 Sep 24, 2012
OBAMA must be stopped..+ vote out all career politicians.Washington D.C. full house cleanning.Kick them all out OUT OUT OUT...
#9 Sep 24, 2012
Mitt Romney admits he’ll need to raise taxes on the middle class
#10 Sep 24, 2012
#11 Sep 24, 2012
Basically he and Ryan are fucking one important thing up. They are telling too many different lies to too many different people. They cant keep their bullshit straight.
At least W's handlers were smart enough to only have him tell one version of reality and repeat it over and over. He always told the same lies, so he was confident in them and had the look of someone who was unwavering in his beliefs and positions.
Romney and Ryan, though, are all over the place. It would almost be funny if it were not for the fact that half the country is still buying into their bulahit.
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