The Tax Tsunami On The Horizon

Fiscal Policy: Many voters are looking forward to 2011, hoping a new
Congress will put the country back on the right track. But unless
something's done soon, the new year will also come with a raft of tax
hikes — including a return of the death tax — that will be real
killers.

Through the end of this year, the federal estate tax rate is zero —
thanks to the package of broad-based tax cuts that President Bush
pushed through to get the economy going earlier in the decade.

But as of midnight Dec. 31, the death tax returns — at a rate of 55%
on estates of $1 million or more. The effect this will have on
hospital life-support systems is already a matter of conjecture.

Resurrection of the death tax, however, isn't the only tax problem
that will be ushered in Jan. 1. Many other cuts from the Bush
administration are set to disappear and a new set of taxes will
materialize. And it's not just the rich who will pay.

The lowest bracket for the personal income tax, for instance, moves up
50% — to 15% from 10%. The next lowest bracket — 25% — will rise to
28%, and the old 28% bracket will be 31%. At the higher end, the 33%
bracket is pushed to 36% and the 35% bracket becomes 39.6%.

But the damage doesn't stop there.

The marriage penalty also makes a comeback, and the capital gains tax
will jump 33% — to 20% from 15%. The tax on dividends will go all the
way from 15% to 39.6% — a 164% increase.

Both the cap-gains and dividend taxes will go up further in 2013 as
the health care reform adds a 3.8% Medicare levy for individuals
making more than $200,000 a year and joint filers making more than
$250,000. Other tax hikes include: halving the child tax credit to
$500 from $1,000 and fixing the standard deduction for couples at the
same level as it is for single filers.

Letting the Bush cuts expire will cost taxpayers $115 billion next
year alone, according to the Congressional Budget Office, and $2.6
trillion through 2020.

But even more tax headaches lie ahead. This "second wave" of hikes, as
Americans for Tax Reform puts it, are designed to pay for ObamaCare
and include:

The Medicine Cabinet Tax. Americans, says ATR, "will no longer be able
to use health savings account, flexible spending account, or health
reimbursement pretax dollars to purchase nonprescription, over-the-
counter medicines (except insulin)."

The HSA Withdrawal Tax Hike. "This provision of ObamaCare," according
to ATR, "increases the additional tax on nonmedical early withdrawals
from an HSA from 10% to 20%, disadvantaging them relative to IRAs and
other tax-advantaged accounts, which remain at 10%."

Brand Name Drug Tax. Makers and importers of brand-name drugs will be
liable for a tax of $2.5 billion in 2011. The tax goes to $3 billion a
year from 2012 to 2016, then $3.5 billion in 2017 and $4.2 billion in
2018. Beginning in 2019 it falls to $2.8 billion and stays there. And
who pays the new drug tax? Patients, in the form of higher prices.

Economic Substance Doctrine. ATR reports that "The IRS is now
empowered to disallow perfectly legal tax deductions and maneuvers
merely because it judges that the deduction or action lacks 'economic
substance.'"

A third and final (for now) wave, says ATR, consists of the
alternative minimum tax's widening net, tax hikes on employers and the
loss of deductions for tuition:

• The Tax Policy Center, no right-wing group, says that the failure to
index the AMT will subject 28.5 million families to the tax when they
file next year, up from 4 million this year.

• "Small businesses can normally expense (rather than slowly deduct,
or 'depreciate') equipment purchases up to $250,000," says ATR. "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.'"

• According to ATR, there are "literally scores of tax hikes on
business that will take place," plus the loss of some tax credits. The
research and experimentation tax credit will be the biggest loss, "but
there are many, many others. Combining high marginal tax rates with
the loss of this tax relief will cost jobs."

• The deduction for tuition and fees will no longer be available and
there will be limits placed on education tax credits. Teachers won't
be able to deduct their classroom expenses and employer-provided
educational aid will be restricted. Thousands of families will no
longer be allowed to deduct student loan interest.

Then there's the tax on Americans who decline to buy health care
insurance (the tax the administration initially said wasn't a tax but
now argues in court that it is) plus a 3.8% Medicare tax beginning in
2013 on profits made in real estate transactions by wealthier
Americans.

Not all Americans may fully realize what's in store come Jan. 1. But
they should have a pretty good idea by the mid-term elections, and
members of Congress might take note of our latest IBD/TIPP Poll
(summarized above).

Fifty-one percent of respondents favored making the Bush cuts
permanent vs. 28% who didn't. Republicans were more than 4 to 1 and
Independents more than 2 to 1 in favor. Only Democrats were opposed,
but only by 40%-38%.

The cuts also proved popular among all income groups — despite the
Democrats' oft-heard assertion that Bush merely provided "tax breaks
for the wealthy." Fact is, Bush cut taxes for everyone who paid them,
and the cuts helped the nation recover from a recession and the worst
stock-market crash since 1929.

Maybe, just maybe, Americans remember that — and will not forget come
Nov. 2.

http://www.investors.com/NewsAndAnal...e-Horizon.aspx

"ØbaMaØ Tse Dung" wrote in message
...
The Tax Tsunami On The Horizon

Time you Pugs pay up for Bush's fiascos.



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∅baMa∅ Tse Dung wrote:
The Tax Tsunami On The Horizon

Fiscal Policy: Many voters are looking forward to 2011, hoping a new
Congress will put the country back on the right track. But unless
something's done soon, the new year will also come with a raft of tax
hikes — including a return of the death tax — that will be real
killers.

Through the end of this year, the federal estate tax rate is zero —
thanks to the package of broad-based tax cuts that President Bush
pushed through to get the economy going earlier in the decade.

But as of midnight Dec. 31, the death tax returns — at a rate of 55%
on estates of $1 million or more. The effect this will have on
hospital life-support systems is already a matter of conjecture.

Resurrection of the death tax, however, isn't the only tax problem
that will be ushered in Jan. 1. Many other cuts from the Bush
administration are set to disappear and a new set of taxes will
materialize. And it's not just the rich who will pay.

The lowest bracket for the personal income tax, for instance, moves up
50% — to 15% from 10%. The next lowest bracket — 25% — will rise to
28%, and the old 28% bracket will be 31%. At the higher end, the 33%
bracket is pushed to 36% and the 35% bracket becomes 39.6%.

But the damage doesn't stop there.

The marriage penalty also makes a comeback, and the capital gains tax
will jump 33% — to 20% from 15%. The tax on dividends will go all the
way from 15% to 39.6% — a 164% increase.

Both the cap-gains and dividend taxes will go up further in 2013 as
the health care reform adds a 3.8% Medicare levy for individuals
making more than $200,000 a year and joint filers making more than
$250,000. Other tax hikes include: halving the child tax credit to
$500 from $1,000 and fixing the standard deduction for couples at the
same level as it is for single filers.

Letting the Bush cuts expire will cost taxpayers $115 billion next
year alone, according to the Congressional Budget Office, and $2.6
trillion through 2020.

I thought you guys were all about deficit reduction. You've already cut
services to the bone; not much else to do but make the fat cats pay more.

The whole point of the inheritance tax is to prevent family dynasties.
it should be 75%.

Obama is Swahili for Osama.

Tammy and the Bachelor movie is on the TCM channel right now.
Wayyyyy back in 1957 my old buddy and I were in down town Jackson.I said
to him, I said, That looks like it might be a good movie, lets see that
movie.At first, he didn't want to see that movie.When the movie was over
he said, That was a damn good movie!
cuhulin