Devildawg15's blog: "Five Months To The Largest Tax Increase In History"

In just five months, the largest tax increase 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 rate will rise from 35% to 39.6% ( this is also the rate at which two-thirds of small business profits are taxed). The lowest rate will rise from 10% to 15%. 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 tax rates. So much for only soaking the rich!  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 taxeson marriage and family. The "marriage penalty" (narrower tax bracketsfor married couples) will return for 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 ther 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% 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 saver and investors. The capital gains tax will rise from 15% this year to 20% in 2011. The dividends tax will rise from 15% this year to 39.6% in 2011. These rates will rise again in 2013 another 3.8%.

Second Wave: Obamacare

There are over twenty new or higher taxes in Obamacare. Several will first go into effect on January !, 2011. They include:

The "Medicine Cabinet" Tax. Thanks to Obamacare, Americans will no longer be able to use health savings accounts, flexible spending accounts, or health reimbursement pre-tax dollars to purchasse non-prescription, over the counter medicines (except insulin).

The "Special Needs Kids" Tax. This provision of Obamacare imposes a cap on flexible spending accounts of $2500( currently there is no federal government limit). There is one group of FSA owners for whom this cap is 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 school in Washington DC, the National Child Research Center, can easily exceed $14000 per year. Under tax rules, FSA dollars can be used to pay for this type of special needs education, but their FSA will be capped at $2500.

The HSA Withdrawal Tax Hike. This provision of Obamacare increases the additional tax on non-medical early withdrawals from a HSA from 10% to 20%, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10%.

Third Wave: The Alternative Minimum Tax and Employer Tax Hikes

When Americans prepare to file their 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. 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 slow- deduct, or "depreciate") equipment purchases up to $250000. This will be cut all the way down to $25000. 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 effect. 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. Employer-provided educational assistance is curtailed. The student loan interest deduction will be disallowed for hundreds of thousands of families.

Charitable contributions from IRAs nno longer allowed. Under current law, a retired person with an IRA can contribute up to $100000 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, to add insult to injury, your insurance is income on your W-2's. One of the surprises we'll find next year, a 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, your W-2 tax form sent by your employer will be incresed to show the value of whatever insurance you are given by the company. It does not matter if it's a private concern or government 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 $15000 or $20000 additional gross does to your tax debt. That't what you'll pay next year. For many, it also puts you in a higher tax 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.

PEOPLE HAVE THE RIGHT TO KNOW THE TRUTH BECAUSE AN ELECTION IS COMING IN NOVEMBER.