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Editor/Founder: Bill Smith, Ph.D. [aka: OzarkGuru & 2010 AFP National Blogger of the Year]
Contact: editor@arranewsservice.com (Pub. Since July, 2006)
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One of the penalties for refusing to participate in politics is that you end up being governed by your inferiors. -- Plato (429-347 BC)

Friday, June 15, 2012

Norquist: Taxmageddon Is Coming - January 1, 2013

Grover Norquist, Americans for Tax Reform: On January 1st, American taxpayers will experience the largest tax increase in U.S. history. As the ball drops on the New Year, we will experience an immediate $500 billion tax hike and the Mainstream Media is doing everything it can to avoid covering this fact.

For those Americans struggling to find a job, this massive tax increase will not make it any easier. Sadly, Liberals in Washington and political commentators are already salivating over the idea of additional taxes. They cannot stand the idea of a federal government that lives within its means.

The coming tax increases will be devastating. Every American that pays taxes will see their rate go up. The small business tax rate will grow to nearly 40 percent. The AMT will grow from 4 million to 31 million victims. The death tax will take half of what many Americans leave behind when they die. The capital gains rate will rise from 15 to 24 percent, and the top dividend rate will rise from 15 to 45 percent. The marriage penalty will return, and the child tax credit will be cut in half. Obamacare will impose 20 new or higher taxes on families and small employers, including a new tax on medical devices like braces and pacemakers. [Editor's Note: The U.S. House has passed legislation to repeal the Obamacare excise tax on mediacal devises but it has yet to be positively considered by the U.S.Senate or the Obama White House.]

[Note: A detailed list is at the end of this article]

As you approach election season, it is vitally important that you ask candidates and elected officials about the coming Taxmageddon: do they support raising taxes on millions of Americans or will they fight for lower taxes and less government spending?

You have the right to know where your elected officials and candidates for office stand on important issues. One of the best ways to know where a candidate stands on taxes is the Taxpayer Protection Pledge. Currently, 238 members of the U.S. House of Representatives and 41 U.S. Senators have taken the Pledge, which is a written commitment to oppose net tax hikes. In addition, there are over 247 candidates running for Congress that have made that same commitment. Click here to see if your candidate or elected official has signed the Taxpayer Protection Pledge.

President Obama has promised to let the 2001 and 2003 tax cuts expire. If this happens, the only way to immediately reverse Taxmageddon in 2013 is to elect officials who promise to oppose higher taxes. Candidates who sign the Taxpayer Protection Pledge have made that promise to taxpayers.

Elected officials will only focus on reining in Washington’s irresponsible spending binge when tax hikes are taken off the table. The first step in that process is making sure they promise to hold the line on taxes.
-------------
Grover Norquist is founder and president of Americans for Tax Reform. He is a conservative activist, a popular speaker, and a member of the Council on Foreign Relations. Norquist is the author of the book Leave Us alone: Getting the Government's Hands Off Our Money, Our Guns, Our Lives.



Taxmageddon Is January 1, 2013

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, 2013:

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 (later re-upped by President Obama and Democrat Congress in 2010).  The following tax hikes will occur on January 1, 2013:

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 the majority 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 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.  The “marriage penalty” (narrower tax brackets for married couples) will return from the first dollar of taxable 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.

Middle Class Death Tax.  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.  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 23.8 percent in 2013.  The dividends tax will rise from 15 percent this year to 43.4 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:

Medicare Payroll Tax Hike.  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.

“Special Needs Kids Tax.”  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.  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.  This Obamacare cap harms these families.

Medical Device Tax.  Medical device manufacturers employ 360,000 people in 6000 plants across the country. This law imposes a new 2.3% excise tax.  Exempts items retailing for <$100.

“Haircut” for Medical Itemized Deductions.  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).  The new provision imposes a threshold of 10 percent of AGI. Waived for 65+ taxpayers in 2013-2016 only.

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.  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.  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.

Full business expensing will disappear.  In 2011, businesses can expense half of their purchases of equipment.  Starting on 2013 tax returns, all of it will have to be “depreciated” (slowly deducted over many years).

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.

Tags: Taxmageddon, high taxes, more taxes, Jan 1, 2012, Grover Norquist To share or post to your site, click on "Post Link". Please mention / link to the ARRA News Service. Thanks!
Posted by Bill Smith at 12:15 PM - Post Link

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