Fw: FYI (a bit overwhelming)

2011  Taxes

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 accounts (FSA), or health reimbursement (HRA) pretax dollars to purchase nonprescription, 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, DC (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 nonmedical 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.  Covered 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.

PDF Version - Read more:

Now your insurance is INCOME on your W2's......

One of the surprises we'll find come next year, is what follows - - a  little "surprise" that 99% of us had no idea was included in the "new and improved" healthcare legislation . . . the dupes, er, dopes,  who backed this
administration  will be astonished!

Starting in 2011, (next year folks), your W-2 tax form sent by your employer will be increased to show the value of whatever health insurance you are given by the company. It does not matter if that's a private concern or governmental body of some sort.  If you're retired?  So what; your gross will go up by the amount of insurance you get.

You will be required to pay taxes on a large sum of money that you have never seen.  Take your tax form you just finished and see what $15,000 or $20,000 additional gross does to your tax debt.  That's what you'll pay next year.  For many, it also puts you into a new higher bracket so it's  even worse.

This is how the government is going to buy insurance for the 15% that don't have insurance and it's only part of the tax increases.

Not  believing this???  Here is a research of the summaries.....

On page 25 of 29: TITLE IX REVENUE PROVISIONS- SUBTITLE A: REVENUE OFFSET PROVISIONS-(sec.  9001, as modified by sec. 10901) Sec.9002 "requires employers to include in the W-2 form of each employee the aggregate cost of applicable employer sponsored group health coverage that is excludable from the employees gross income."

Joan Pryde is the senior tax editor for the Kiplinger letters.  Go to Kiplingers and read about 13 tax changes that could affect you.  Number 3 is what is above.

Why am I sending you this?  The same reason I hope you forward this to every single person in your address book.

People have the right to know the truth because an election is coming in


Anonymous said...

When in doubt, pile on more claims. Can't disprove it in ten seconds? Guess that means I win!

PolitiFact on the largest tax increase in history (spoilers: Reagan)
Snopes on the dividends tax (from way back during the election!)

Part 1: Basically all "Bush-era tax cuts that will expire or be reduced on their own." I guess not constantly cutting taxes counts as a deliberate "tax increase"?

Part 2: I can't find where these are listed in the health care bill, and no one is kind enough to point out where they are written down. Do they exist? Who knows?

The "Special Needs Kids Tax" is a particularly dishonest one, though. You can't afford special education costs without abusing a medical tax loophole? Clearly that's the health care system's fault, right?

Part 3: The Tax Policy Center was established by Republicans as a neutral party. It is not "left-leaning." Here's what they say about the Alternative Minimum Tax. Surprise! The stimulus bill included the exemptions this e-mail is crying about losing, and the President wants to make them permanent instead of stringing them along with extensions year after year.

Anonymous said...

And here's one more from the Tax Policy Center: "Five Myths about the Bush Tax Cut".

ferschitz said...

Note that the highest end of the graduated tax is 39.5%. So billionaires who make millions or billions per year only pay 39.5%, while citizens who make just over $250k also pay that same rate.

I never see Republicans complaining about what billionaires pay in comparison to "average" citizens earning towards the upper end of the pay scale (those who make more than $250k but less than $1mill per year).

Why don't billionaires pay more in taxes, so that some citizens at the lower end can pay proportionately less? Makes sense to me, but not to Republicans who'd rather whine than see the reality in front of them.

Thx 4 Fish said...

Funny how we couldn't afford the stimulus, but when borrowed money comes to the wealthiest in the form of Tax Cuts the Republics say -- Yes We Can! The Dems should spend more effort shooting down this idiotic idea that tax cuts for the wealthy pay for themselves. They do not--they result in more borrowed money, and they have a very marginal (I'd say fictional) benefit to the economy.

Marc with a C said...

Fuck the rich. I've got your class warfare right here. When did working America become convinced that letting the top 1-2% of society (that coincidentally controls about 60-70% of all the wealth) get away with massive tax breaks while shipping our jobs overseas was a good idea?

Bring on Huey Long.

Thx 4 Fish said...

I heard a statistic today that 20% of people believe that they are in the top 1-2% of earners in the country. To qualify for the top 1% bracket in 2007 one must have earned over $410,096--that's adjusted gross income.

Hibryd said...

ferschitz -

Actually, billionaires are likely to pay much less than 39.5% because actual billionaires get most of their income from capital gains. Which is capped as a measly 15% to "encourage investment". (As if investors would shove their money under a mattress and sacrifice it to inflation rather than pay more taxes on the returns.)

Hence Warren Buffet's comment that he pays a lower tax percentage than his secretary.

ferschitz said...

Thanks, Hibyrd, and you're quite correct about the 15% on capital gains being a much lower tax rate than what most working schlubs have to pay on income.

That said, though, there are still those who work for a living, whose income taxes are quite a lot lower than the progressive rates used to be.

Both the capital gains tax and the upper brackets of income tax rates should be raised.

There is still a huge disparity between how wage earners are taxed at the top end of the wage scale. And capital gains is very unfair bc it mainly benefits only the excessively wealthy. It's really a giant rip-off of the lower and middle classes by the extremely wealthy.

Conservatives love to complain about the neoliberal "nanny state." In reality, those benefiting from the "nanny state" are the extremely wealthy elites who have set up the system to benefit them the most.

Hence, Buffet's comment... not that Buffet's done a damn thing about it other than rake in the bucks for himself.

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