In six months, the largest tax hikes in the history of America
will take effect. They will hit families and small businesses in three
waves on January 1, 2011:
First Wave:
Expiration of 2001 and 2003 Bush tax cuts
In 2001 and 2003, 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:
Obama care
There are over twenty new or higher taxes in Obama care. Several
will first go into effect on January 1, 2011. They include:
The "Medicine Cabinet Tax." Thanks to Obama care, Americans will no
longer be able to use health savings account (HSA), flexible spending
account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase
non-prescription, over-the-counter medicines (except insulin).
The "Special Needs Kids Tax." This provision of Obama care 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 not be used to pay for this type of special needs
education.
The HSA Withdrawal Tax Hike. This provision of Obama care increases
the additional tax on non-medical early withdrawals from an HSA from 10
to 20 percent, disadvantaging them relative to IRA's 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.
Now your company paid insurance is INCOME on your W2's. Starting in 2011, 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 company or governmental agency of some sort. If you're retired your gross will go up by the amount of insurance you get.
You will be required to pay taxes on money that you have not seen. What will $15,000 - $20,000 additional gross income do to your tax debt. That's what you'll pay next year. Because the Bush tax cuts expire, it also puts you into a new higher bracket.
This is how the government is going to pay for insurance for
the15% that don't have insurance now, including illegal's, and it's only part of the tax increases.
Not believing this?
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.
http://www.kiplinger.com/businessresource/forecast/archive/health-care-reform-tax-hikes-on-the-way.html read about 13 tax changes that affect you.
Why am I sending you this? The same reason I hope you
forward this to every single person in your address book.
TELL EVERYONE YOU KNOW!!!
People have the right to know the truth because an election
is coming in November.
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