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Six Months to Go Until The Largest Tax Hikes in History
In addition to all the money we'll no longer have at our disposal (but the government will) the $2500 cap on FSA accounts is very troubling for me. This has really helped my family afford the care we need. For me as a chronic pain patient, it's going to hit very hard. I find it strange considering Obama's previous statements that his only motivation in passing Obamacare is to help working families get needed medical care at an affordable price
that he would hogtie this very important benefit. It isn't consistent with being able to afford health care.
Six Months to Go Until
The Largest Tax Hikes in History
July 1, 2010
Contact: Ryan Ellis, ATR Tax Policy Director: ***@****
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
Page 2 of 2
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.
http://www.atr.org/files/files/070110pr-jan2011taxes.pdf
that he would hogtie this very important benefit. It isn't consistent with being able to afford health care.
Six Months to Go Until
The Largest Tax Hikes in History
July 1, 2010
Contact: Ryan Ellis, ATR Tax Policy Director: ***@****
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
Page 2 of 2
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.
http://www.atr.org/files/files/070110pr-jan2011taxes.pdf
I do agree with your post (see, we agree on lots of things..lol). I firmly believe in a hand up, not a hand out and also accountability. Complete hand outs should be (as they were always intended) a temporary measure. Unfortunately, much of the system is currently designed so that once people are on the system, it's extremely difficult to get off of it. Not because I believe that the system wanst to keep them down, just that they haven't really addressed it in a long time. I firmly believe that many of the payouts could be cut dramatically, saving a whole lot of money if a major major overhaul was done. People who need it could still get the help they need and $$ could be saved. And fraud...I cannot even begin to imagine how much that costs. No, there are ways to do it without throwing people under the bus!!
That is the whole point ...there is no money to give them ..it doesnt grow on Trees ..all this kind talk, no money folks ,He wanted a Global Stimulus ,spoke about it at The G20 Europe shot him down in flames telling him No thank you we are going to cut taxes , cut spending .......So when you are sorry about cutting programmes in America it would be great to know where the money is coming from to pay for them ..........
Those in our population who cannot take care of themselves: the children, elderly, those with infirmities of the mind or body must be cared for. Not to is a crime against humanity. In my opinion anyway.
However, those who are educated and skilled have little to no excuse for not at least actively seeking employment. I do believe in loans and grants for those citizens of our country who want to learn skills or get an education. That is the key to economic stability. A large population of unskilled and uneducated or under educated are a burden. And the immigration crisis makes this worse.
We need to focus on programs that give people a hand up. Drop the hand outs. And unfortunately because of the out of control spending this past year, we have no more money to help those who are unemployed. It's all very sad and upsetting.
However, those who are educated and skilled have little to no excuse for not at least actively seeking employment. I do believe in loans and grants for those citizens of our country who want to learn skills or get an education. That is the key to economic stability. A large population of unskilled and uneducated or under educated are a burden. And the immigration crisis makes this worse.
We need to focus on programs that give people a hand up. Drop the hand outs. And unfortunately because of the out of control spending this past year, we have no more money to help those who are unemployed. It's all very sad and upsetting.
I know how you feel R. The thing to remember is that not all of the people needing help are what you refer to as Human Parasites (I know what you mean, because you told me before). There are many that would love to work and for a variety of reasons don't...disabilities, mental health issues, lost jobs and can't find others...so on and so on. You and I feel differently about addicts, true. But they are not all addicts. I know you know that. Many are good people who need help to get back on their feet, and can get there.
I am all for helping the needy but I wouldn’t pisss on a Human Parasite if he was on Fire.
Ok, this is a hot button topic for me, so I apologize. It's one of those issues that I deal with personally on an everyday basis. I can tell you this...and I know this to be fact. To cut social programs is a mistake. To put steps in place to ensure that are not abused is a good idea. There are many things that can be changed to help people climb out of their current situation that would cost far less money. But to just cut them off, period is creating a society that I don't think any of us want to be a part of. Look at truly capitilistic societies where there are no social programs... much of the Caribean is like that. Jamacia is a country that comes to mind. You wind up with the wealthy and the destitute with no in between, and no hope of ever achieving more. Even if the people impacted mean nothing, think of what that means to the crime rate...there are more repurcussions than I can mention in this post. The impact would be, and will be very very negative..trust me on that.
Well of course they are one paycheck away from starving and its going to get worse in the US with all the spending this admin is doing, even Europe is cutting spending when OBama said to them about a Global stimulous they said No thank you we are not printing moremoney we are cutting spending ,, Energy prices are going to rocket the poor wont even be able to afford the electric unless they get help ,so I agree its sad ......
ha sense as in smell ..........
Sure does... now how do you know they do ...oh sorry you 'heard ' you have a great snese of humor ......
YES definatly ..yes smaller government ...you got it .... by george you got it .......
oohhhoo we havent started yet.......we are all going to be on food stamps the way he is going..if theres enough to go around ...............
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