Tax Hikes Are Coming, If Obama Gets His Way

Tax Hikes Are Coming, If Obama Gets His Way

May
17th, 2011

Dr. John A. Sparks

President Obama is now openly proposing tax increases on at least two
important fronts as part of his “solution” to the growing debt crisis.

The president’s favorite approach is to talk about the “wealthiest
Americans.” In his speech on April 13, he proclaimed that he will do away with
the “Bush tax cuts” for the rich as soon as he has the opportunity. Just a week
later, April 21, he said that wealthier taxpayers like him should be willing to
pay “a little bit more” to prevent various social programs for the elderly and
the young from being cut. Of course, this is his way of preparing high-earning
Americans for a jump in their federal income tax rates. Apparently, he believes
that they are not currently doing their part or paying their fair share.

Listening to President Obama talk, one would think that the present federal
income tax system is a flat-rate system where everyone, no matter what their
income, pays at the same rate. Of course, the current system is, and has been
for a long time, a steeply graduated tax system where the highest earners pay at
the rate of 35 percent on the topmost portion of their earnings while low
earners pay at the rate of 10 percent. Now, Mr. Obama wants to push the highest
rates even higher, to near 40 percent. President Obama believes, perhaps
rightly, that soaking the rich will not hurt him politically.

But the president is targeting more than the wealthiest. In fact, in his
desperation, he is apparently now prepared to impose heavier tax burdens on
middle-income Americans as well. How? In a recent speech he stated that he wants
to raise the “cap” on Social Security. The cap on Social Security taxes works
this way: If an employee earns more than the cap (currently, $106,800) in a
given tax year, Social Security taxes are not deducted from the amount
of earnings over the cap. So, for example, if an employee earned $126,800 in
2010, he would pay 6.2 percent in Social Security taxes on the first $106,800,
or $6,621.60. The employer would also pay 6.2 percent. On the overage—the
$20,000 of income beyond the cap—neither the employee nor the employer would pay
any Social Security tax.

However, if President Obama has his way and the cap is raised by….

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State of the Union: Mammoth Government is the New Normal

State of the Union: Mammoth Government is the New
Normal

January 27th, 2011

Ben Johnson, FloydReports.com

In his 2011
State of the Union Address
, Barack Obama gave himself five more years of
trillion-dollar deficit spending, a $678 billion income tax hike, a Social
Security tax increase, and the permanent extension of ObamaCare – and he gave
Republicans medical malpractice reform and a joke about a salmon.
Since his inauguration, the president has gone on a two-year spending orgy
unrivaled since the days of Lyndon Johnson or FDR. Faced with a national
backlash against towering debt, he has come up with a “compromise”: Americans
should accept the big government expansion he has forced down their throats and
move on. This follows the president’s familiar pattern of forcing through costly
and unpopular measures, then promising “discipline” after the fact.
The most reported aspect of the speech was Obama’s pledge to freeze
discretionary, non-military spending at their current levels – exempting such
major programs as Social Security, Medicare, Medicaid, and Homeland
Security.
At the risk of stating the obvious, which perhaps no one has yet stated,
there is no “savings.” As President Obama would say, “Let’s be
clear”: Savings is when you reduce the amount of money you are spending. The
president’s proposal is to spend the same amount of money. The only “savings”
would come from the fact that inflation
unleashed by deficit
spending
and quantitative
easing
will devalue the dollar – but this is hardly a cause for cheer.
History shows that spending freezes rarely freeze anything. The most
ambitious attempt was the 1985 Gramm-Rudman-Hollings Act, which attempted to
control deficit spending by future Congresses, but many of the same politicians
who voted for the bill decided they would not abide by its terms the next year.
Deficits continued to mount. To give a more recent example, last year Congress
approved slightly more
than half
of the whopping $11.5 billion in spending cuts Obama requested
last year.
The amount of the budget actually affected is rather modest, indeed. It would
apply to approximately
12 percent of the budget
. Alec Phillips, an analyst with Goldman Sachs,
estimates that if every Congress for the next five years holds to current
levels, it would “save” $200 billion. The New York Times noted its
higher estimate of “$250 billion in savings over 10 years would be less than 3
percent of the roughly $9 trillion in additional deficits the government is
expected to accumulate
over that time.” Obama’s plan would cost
half-a-trillion dollars more
than returning
to 2008 spending levels
, as proposed by the most moderate Republicans. Sen.
Rand Paul has proposed a half-a-trillion
dollar spending cut
this year, which includes cutting food stamps
and eliminating the Corporation for Public Broadcasting and the National
Endowment for the Arts. Ohio Congressman Jim Jordan and Senator Jim DeMint
introduced a bill to cut
$2.5 trillion
over ten years, eliminating the aforementioned programs as
well as Amtrak and the president’s “high-speed rail” and rolling back spending
to 2006 levels. Obama’s freeze is small beer in its own terms and hypocritical
when paired with his calls for new spending.
The State of the Union made only passing reference to the greatest budgetary
crisis facing us: out of control entitlements (and most of his “solutions” are
bad ideas; see below). “Mandatory” spending alone exceeds projected federal
revenues – the amount of money the government took in all year. If we eliminated
100 percent of discretionary spending – privatized the Post Office, dismantled
the military, and fired every federal prosecutor and judge – we would still run a
deficit
.
Nonetheless, the president instructed us, “The final step to winning the
future is to make sure we aren’t buried under a mountain of debt.” As though we
are not already buried under a mountain of debt. As though this were not a
mountain of his own making. As though it were not one he wished to greatly
enlarge
.
What Obama intends to freeze is big government. His proposal to hold-the-line
comes after he jacked
up federal spending by 84 percent
. After inflating the federal government
beyond the free market’s carrying capacity, he now wishes to maintain the status
quo.
As usual Sen. Jeff Sessions, R-AL, had the best analysis of Obama’s spending
freeze, calling it “a plan for deficit preservation.” The day
after the State of the Union speech, the Congressional Budget Office (CBO)
predicted the deficit for 2011 will be….
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.

“Historic” Rise in Taxation in 6 Mos.

“Historic” Rise in Taxation in 6 Mos.

Posted by Veronica (Profile)

Friday, July 2nd at 12:20PM EDT

53 Comments

We’ve been here before.

Americans For Tax Reform culled a few things from the List of Expiring Federal Tax Provisions 2009-2020 off the government’s website:

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 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

Government: Destroying Your Wealth a Trillion Dollars at a Time

Government: Destroying Your Wealth a Trillion Dollars at a Time

Posted By Thomas Del Beccaro On May 25, 2010 @ 5:39 am In Congress, Economics, Featured Story, Financial Services, Obama, Politics, Uncategorized | 20 Comments

Recent financial headlines provide a remarkable glimpse into America’s future if we stay on the same track we are now.  From Bloomberg news we learned:  “US Stocks fluctuate amid concerns European debt crisis hasn’t run course.”  Meanwhile, the IMF predicted that the “US national debt will soon reach 100% of GDP.”  Sadly, the World’s, the United States’ and California’s (16% of the US Economy and the 9th largest economy in the world) financial prospects are far worse than those headlines recognize.

The US economy is nearing $15 trillion in gross domestic product (GDP) per year.   The national debt it carries on the books is nearly that high and will certainly reach it, and far surpass it, within 2 years given the trillion dollar deficits that are predicted as far as the eye can see.  Of course, off the books, in accounting that would make Enron blush, the US government has $75 trillion or more in long term unfunded liabilities.  On a more short term basis consider this: the US Government revenues are running below $3 trillion dollars per year – yet its debt is over $13 trillion and growing.  In other words, the existing US debt is 4 to 5 times its current revenue.

Imagine if you will, if your credit card debt was 4 times your current income and the income you are likely to earn in each of the next 4 years.  There is not a bankruptcy attorney in the country that would not tell you that it is time to declare bankruptcy.  For its part, California is projected to have unfunded liabilities as high as $600 billion or 6 ½ times it current revenues.   Sadly for the US and California taxpayers, bankruptcy is simply not an option.

All of which brings us to the European debt crisis – which has anything but run its course.  Indeed, German Chancellor Merkel said this about the recent bailout of Greece: “We didn’t do more than buy time . . .” to get their collective government houses in order.  Meanwhile, USA Today, whose financial reporting is rather blunt at times, featured this headline: US “Investor fears ignite sell-off.”

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The Fall of the Incumbents

The Fall of the Incumbents

Posted By Frontpagemag.com On May 19, 2010 @ 1:03 am In FrontPage | 5 Comments

For months now, speculation has been rife that the Tea Party movement and the grassroots revolt against big-government that it represents poses a real threat to political incumbents of both parties. Yesterday’s primary election results have transformed such speculation into political reality.

In Kentucky, the Tea-Party backed candidate, Rand Paul, the son of libertarian Texas Congressman Ron Paul, won a convincing victory over Kentucky Secretary of State Trey Greyson. Greyson enjoyed the support of the GOP establishment, including Senate Minority Leader Mitch McConell, but Paul had the Tea Party insurgents on his side. Unapologetically embracing the Tea Partiers, Paul ran on a straightforward small-government platform, calling for a balanced federal budget, a reduced national debt, and an end to government bailouts and subsidies for private industries and interests. In the end, he won by a comfortable margin.

Rand Paul’s victory is only the latest example of the Tea Partiers successfully gate-crashing the official Republican camp. In Utah earlier this month, voters in the Republican nomination convention heeded the Tea Party movement’s urging to dump Sen. Bob Bennett. Dooming Bennett was his support for several big-government initiatives, most prominently the Troubled Asset Relief Program bank bailout. Florida Gov. Charlie Crist has also met with the wrath of the Tea Partiers, whose opposition forced him surrender the Republican mantle to Tea Party favorite Marco Rubio in favor of an independent run. Polls suggest he faces an uphill struggle.

While the Tea Parties have had their greatest impact on Republican primary races, Democrats have also born the brunt of the anti-incumbent backlash. In Pennsylvania last night, Republican defector Sen. Arlen Specter lost the state’s Democratic primary to two-term Rep. Joe Sestak, effectively ending his political career. Even in the absence of anti-incumbent sentiment, Specter’s was a tall order: He had to convince voters that his political conversion was a matter of principle rather than, as was apparent to all, pure political expedience. It was an obvious fiction that not even President Obama, who campaigned for Specter and even cut radio and television ads on his behalf, could make credible.

Even here, though, the Tea Party, or at least its brand of anti-Washington angst, made its presence felt. In his victory speech, Sestak sounded like nothing so much as a Tea Party candidate, as he hailed his win as a triumph “over the establishment, over the status quo, even over Washington, D.C.” Of course, it’s a bit rich for a Democrat to style himself as an opponent of Washington, where after all Democrats control both houses of Congress. But such is the national mood that even the party in charge must distance itself from any association with leadership.

Arlen Specter meanwhile is not the only political veteran on the Democratic side, however recent his affiliation, to find himself out of a job for too-close a connection with Washington’s failures. In West Virginia last week, 14-term Democratic Rep. Alan Mollohan became the first House member in 2010 to lose a reelection bid. Although he lost to a fellow Democrat, key in Mollohan’s defeat was his support for the Obama administration’s health care overhaul. It is a sign of perilous times ahead for the party that, even in a Democratic primary, support for the Democratic administration’s signature legislative initiative has become a political death warrant.

Still, that does not yet make the Tea Party and its small-government vision kingmaker in political races. While the influence of the Tea Partiers has obviously been important, the usual primary season caveats apply. Primary elections tend to draw a more ideologically motivated cohort of voters, and it remains to be seen whether the Tea Party will be a significant factor in the fall’s elections races. And yet it is becoming increasingly implausible to claim, as many in the prestige media have, that the Tea Party and the backlash against big government are fringe phenomena. As Rand Paul declared in his victory speech last night: “I have a message from the Tea Party. We’ve come to take our government back.” They will soon have their chance.

A REAL EYE OPENER ! Bush debt vs Obama debt

A REAL EYE OPENER !


 
The Washington Post babbled again today about Obama inheriting a huge deficit from Bush.
Amazingly Enough, a lot of people swallow this nonsense.  So once more,  a short civics lesson.
Budgets do not come from the White House.  They come from Congress, and the party that controlled Congress since January 2007 is the Democratic Party.  They controlled the budget process for FY 2008 and FY 2009, as well as FY 2010 and FY 2011.  In that first year, they had to contend with George Bush, which caused them to compromise on spending, when Bush somewhat belatedly got tough on spending increases.  For FY 2009, though, Nancy Pelosi and Harry Reid bypassed George Bush entirely, passing continuing resolutions to keep government running until Barack Obama could take office.  At that time, they passed a massive omnibus spending bill to complete the FY 2009 budgets.
And where was Barack Obama during this time?  He was a member of that very Congress that passed all of these massive spending bills, and he signed the omnibus bill as President to complete FY 2009.  Let’s remember what the deficits looked like during that period: 

  
If the Democrats inherited any deficit, it was the FY 2007 deficit, the last of the Republican budgets.  That deficit was the lowest in five years, and the fourth straight decline in deficit spending.  After that, Democrats in   Congress took control of spending, and that includes Barack Obama, who voted for the budgets.  If Obama inherited anything, he inherited it from himself.
In a nutshell,  what Obama is saying is I inherited a deficit that I voted for and then I voted to expand that deficit four-fold since January 20th.
WAKE UP,  AMERICA, BEFORE ITS TO LATE
There is no way this will be widely publicized,
unless each of us sends it on!
This is your chance to make a difference.

CBO ups Obamacare cost projections by $115 Billion

CBO ups Obamacare cost projections by $115 Billion

May 12th, 2010

By JENNIFER HABERKORN, Politico

 this brings the cost to over $1Trillion for Obamacare

Congressional Budget Office estimates released Tuesday predict the health care overhaul will likely cost about $115 billion more in discretionary spending over ten years than the original cost projections.

The additional spending — if approved over the years by Congress — would bring the total estimated cost of the overhaul to about $1 trillion.

The Congressional Budget Office expects the federal agencies to spend $10 billion to $20 billion over 10 years on administrative costs to implement the overhaul. The CBO expects Congress to spend an additional $105 billion over 10 years to fund discretionary programs in the overhaul.

The CBO released the estimates in response to a request from California Rep. Jerry Lewis, ranking Republican on the House Appropriations Committee. A spokeswoman for Lewis said the inquiry was filed before the House voted on the bill.

“[L]arge sums of discretionary spending in both the House and Senate versions of the health care reform bills have not yet been included in estimates by the CBO, rendering it impossible to make informed decisions regarding the outcome of this legislation,” Lewis wrote in a February letter to House Speaker Nancy Pelosi, asking her to postpone votes until the discretionary spending analysis was complete.

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