“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

Obama one of the best presidents evah! Is there bias in the academy toward Democrats and liberals?

Obama one of the best presidents evah!

Rick Moran

Is there bias in the academy toward Democrats and liberals?

Does Charlie Daniels play a real fast fiddle?

George W. Bush was no FDR, but Barack Obama could be.That’s the verdict of 238 of the nation’s leading presidential scholars, who – for a fifth time – rated Franklin Delano Roosevelt the best president ever in the latest Siena College Research Institute poll.

In office for barely two years, Obama entered the survey in the 15th position – two spots behind Bill Clinton and three spots ahead of Ronald Reagan.

Obama got high marks for intelligence, ability to communicate and imagination, but his score was dragged down by his relative lack of experience and family background.

“Most of the presidents came from elite backgrounds, and he certainly did not,” said professor Douglas Lonnstrom, who crunched the numbers. “He grew up without a father.”

I find this kind of thing fascinating. Not because they rank conservatives and Republicans lower, or that they made FDR #1 (that’s the narrative and they’re sticking to it). It’s that the nation’s public intellectuals operate so much in a cocoon that they don’t realize people are laughing at them when they make Barack Obama the 15th best president of all time, while giving him “high marks for intelligence, ability to communicate and imagination.” The evidence for any of that is so lacking that it obviously exists only in the minds of the respondents.

BTW – they rank Jimmy Carter 7 places higher (#32) than George Bush (#39).

Why Obamanomics Has Failed

Why Obamanomics Has Failed

June 30th, 2010

By ALLAN H. MELTZER, The Wall Street Journal

The administration’s stimulus program has failed. Growth is slow and unemployment remains high. The president, his friends and advisers talk endlessly about the circumstances they inherited as a way of avoiding responsibility for the 18 months for which they are responsible.

But they want new stimulus measures—which is convincing evidence that they too recognize that the earlier measures failed. And so the U.S. was odd-man out at the G-20 meeting over the weekend, continuing to call for more government spending in the face of European resistance.

The contrast with President Reagan’s antirecession and pro-growth measures in 1981 is striking. Reagan reduced marginal and corporate tax rates and slowed the growth of nondefense spending. Recovery began about a year later. After 18 months, the economy grew more than 9% and it continued to expand above trend rates.

Two overarching reasons explain the failure of Obamanomics. First, administration economists and their outside supporters neglected the longer-term costs and consequences of their actions. Second, the administration and Congress have through their deeds and words heightened uncertainty about the economic future. High uncertainty is the enemy of investment and growth.

Most of the earlier spending was a very short-term response to long-term problems. One piece financed temporary tax cuts. This was a mistake, and ignores the role of expectations in the economy. Economic theory predicts that temporary tax cuts have little effect on spending. Unless tax cuts are expected to last, consumers save the proceeds and pay down debt. Experience with past temporary tax reductions, as in the Carter and first Bush presidencies, confirms this outcome.

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Morning Bell: The Dodd-Frank Assault on Economic Recovery

Morning Bell: The Dodd-Frank Assault on Economic Recovery

Posted By Conn Carroll On June 29, 2010 @ 9:16 am In Enterprise and Free Markets | No Comments

Following the release of the 2,000-page Dodd-Frank financial regulation bill last Friday, fixed-income portfolio manager Christine McConnell told Businessweek [1]: “Clarity is good. [Once financial institutions] understand the rules of the road they’ll be able to accommodate their business models.” There is only one problem: passage of the Dodd-Frank bill doesn’t provide any clarity. In fact, it does the exact opposite. The New York Times [2] explains: “The bill, completed early Friday and expected to come up for a final vote this week, is basically a 2,000-page missive to federal agencies, instructing regulators to address subjects ranging from derivatives trading to document retention. But it is notably short on specifics, giving regulators significant power to determine its impact.”

In other words, this law is going to be continually rewritten by federal bureaucrats for years to come. And the continued uncertainty it will create is just the beginning of its faults [3]:

Permanent Bailout Authority: The Dodd-Frank bill creates an “orderly liquidation” process by which regulators are empowered to seize financial institutions that they believe are in danger of failing and liquidate them. While the lack of a broadly accepted process for closing down large financial institutions helped lead to the massive bailouts of 2008 and 2009, this liquidation process is problematic. Federal regulators are granted broad powers to seize private firms they feel are in danger of default, and these powers are subject to insufficient judicial review. Such governmental discretion to seize private property is constitutionally troubling.

Trusting the Same Regulators that Failed Last Time: The legislation establishes a new 10-member Financial Stability Oversight Council composed of regulators that would be responsible for monitoring and addressing system-wide risks to the financial system. This council would also have nearly unlimited powers to draft financial firms into the regulatory system and even force them to sell off or close pieces of themselves. Unfortunately, it is extremely difficult to detect systemic risk before a crisis has occurred, and the council would serve mainly as a group to blame for failing at an almost impossible task. On the other hand, its huge powers are much more likely to destabilize the financial system by stifling innovative products while failing to detect dangers posed by existing ones.

Brand New Innovation Killing Regulators: The bill also creates a new Bureau of Consumer Financial Protection with broad powers to regulate the financial products and services that can be offered to consumers. The new agency would nominally be part of the Federal Reserve System, but it would have extraordinary autonomy. This autonomy would impede the efforts of existing regulators to ensure the safety and soundness of financial firms, as rules imposed by the new agency would conflict with that goal. For many consumers, this would make credit more expensive and harder to get.

Micromanaging the Market: The conference committee also added a form of the “Volcker rule” which would largely prohibit any bank or other institution with FDIC-insured deposits from undertaking proprietary trading or from owning or sponsoring hedge funds or private equity funds. While the legislation does reject the near-total ban on such investments, the difference between legitimate and traditional activities and those the Volcker rule seeks to ban would be difficult, if not impossible, to determine. Attempting to do so would require an intrusive, expensive regulatory compliance system that by its nature would micromanage day-to-day activities.

Fannie and Freddie Forever: Despite much rhetoric about ending bailouts, the bill does nothing to address Fannie Mae and Freddie Mac, two of the largest recipients of federal bailout money. These two government-sponsored enterprises, now in federal receivership, helped fuel the housing bubble. When it popped, taxpayers found themselves on the hook for some $150 billion in bailout money. The failure to address their future is a serious error and shows just how hollow are claims that this agreement will prevent future crises.

These are just some of the major flaws in a bill that is just one House and Senate vote away from President Barack Obama’s desk (a fuller list can be found here [3]). But final passage is not as sure today as it looked Friday. The passing of Sen. Robert Byrd (D-WV) [4] leaves the majority one vote short of the 60 needed to move for a final vote. In addition, the insertion of an estimated $20 billion in new taxes [5] has Sen. Scott Brown (R-MA) reconsidering his original vote in favor of the measure. Scott released a statement [6] explaining: “My fear is that these costs would be passed onto consumers in the form of higher bank, ATM and credit card fees and put a strain on lending at the worst possible time for our economy. I’ve said repeatedly that I cannot support any bill that raises taxes.”

Explaining that the Dodd-Frank bill would force banks to either take on more risk to recoup earnings diminished by reform or behave too conservatively in order to avoid losses, financial analyst Chris Mutascio summarized [1] the ultimate effect of the legislation: “Pick your poison—neither tastes good to us and we believe neither is particularly good for the economy and job growth.”

Quick Hits:

  • This morning, the Missile Defense Agency and U.S. Army soldiers of the 6th Air Defense Artillery Brigade successfully conducted a successful intercept test [7] for the Terminal High Altitude Area Defense (THAAD) missile defense element of the nation’s Ballistic Missile Defense System.
  • Shallow water drillers tell CNN that President Obama’s deep water oil drilling ban has become a stealth ban on all Gulf drilling [8] forcing hundreds of layoffs with many more on the way.
  • House Majority Whip James Clyburn (D-SC) is trying to insert a provision into the war supplemental funding bill [9] that would compel volunteer firefighters to join unions, threatening the survival of America’s nearly 26,000 volunteer fire departments.
  • The lead attorney in the victorious Chicago Second Amendment case promises [10]: “There will be future cases, I will be bringing cases in the days and weeks to come.”
  • President Obama’s political director Patrick Gaspard failed to disclose [11] that he was slated to receive a nearly $40,000 payout from the Service Employees International Union (SEIU) while he was working in the White House.

Obama’s Wonderland Is No Fairy Tale

Obama’s Wonderland Is No Fairy Tale

By Eileen F. Toplansky

As we continue to tumble down the road to economic ruin, security vulnerability, and reduced health care benefits, things become “curiouser and curiouser.” While President Obama speedily demands that General McChrystal zoom home to be dismissed from his post, the frustrated Gulf residents still cannot get all the equipment and assistance that they need to hold back the oil that is wrecking their homes and their livelihoods. Thus, one wonders as Alice in Wonderland did, “Would you tell me, please, which way I ought to go from here?” 
“That depends a good deal on where you want to get to,” said the Cat. And herein is the American people’s conundrum. Where do we want to go as this president continues to severely damage our country and her interests?
Even Europe understands the economic catastrophe that is upon us and wonders if “we’re all mad here” as Obama and team continue to obfuscate the truth. Actor Jon Voight has publicly stated that Obama is lying to the American people. But of course, when Obama speaks, “it means just what [he] chooses it to mean — neither more nor less.” 
“The question is,” said Alice, “whether you can make words mean so many different things.” 
“The question is,” said Humpty Dumpty, “which is to be master — that’s all.” 
And so, in the new Patients’ Bill of Rights, Obama, “speaking ominously,” has warned the health care insurance providers that the government will “be watching [them] closely.”  Ultimately, our soft tyrannical government will be the sole arbiter of our health needs and costs. Though Obama promised otherwise, it is becoming patently obvious that eventually Americans won’t be able to keep their own insurance, since Obama has created a no-win situation for the private health insurance sector, which cannot remain financially solvent. Queues and denial of health care benefits are around the corner. Furthermore, the latest massive bill about financial reform is being pushed through Congress; Senator Dodd has said that it “is about as important as it gets, because it deals with every single aspect of our lives.” Uh-oh!
Furthermore, infatuated with himself, Obama, believed by many to be the messiah, has hurt the very people who pinned such high hopes on him. Already, accounts reveal that minorities and women — those very groups who were part of the affirmative action programs imposed by the federal government — are being adversely affected. Obama promised them pie in the sky but neglected to tell them that a house built upon financially shaky foundations will eventually fold. Moreover, Barney Frank blocks Republicans from offering amendments to reform Fannie Mae and Freddie Mac — the source of so much of the current economic downfall — and so the charade continues, with American taxpayers propping up a defunct system. Obama pointedly dislikes the exceptional nature of America and seeks to destroy it, but are all the congressional Democrats so hateful of the country they swore to serve?
People are slowly allowing themselves to be psychologically enslaved as one group is pitted against the other. When questioned by senators about the massive expansion in hate crimes enforcement, Attorney General Holder responded that hate crimes legislation “would not necessarily cover” instances where whites, Christians, or military members were assaulted. Preferential treatment for blacks at the expense of whites and Asians was part of Obama’s tenure during his time as senator. Double standards and obvious favoritism now reign supreme. Most egregious is Holder’s dismissal of the case where New Black Panther Party members intimidated white voters. Does this portend things to come in November?
How else could Arizona now be a pariah in the Obama administration? Hypocritically, he thinks he will obtain the Hispanic vote while he undermines the rule of law. If I were of Hispanic heritage, I would be incensed at the covert discrimination this represents. It implies that Hispanic people are unlawful and irresponsible! How could other states arrogantly dismiss the genuine legal concerns of Arizonans and start boycotting this besieged state? Government does not want to actually repair the holes in our immigration program. Furthermore, Obama offends those immigrants who have obeyed the law and are adding their talents to the American tapestry. Quite unbelievably, because Obama and Holder will file lawsuits against Arizona, our Mexican neighbors are coming on board and have formally joined a lawsuit challenging Arizona’s new immigration law! 
The Mexican government is merely taking its cue from the deliberate “reeling and writhing, of course, to begin with, and then the different branches of arithmetic — ambition, distraction, uglification, and derision” that Obama employs so well. First, there is his overweening ambition with no true leadership experience; then our 44th president constantly distracts with his pseudo-anger and coarse words. When that trick loses its appeal, he derides and humiliates the banks, the car companies, the BP executives, the people of Arizona, the country, the value system of America, and our allies. This is an autocrat who clearly echoes the Queen when she said, “Now I must give you fair warning: ‘either you or your head.'” There is a genuine fear in this country as people understand that to disagree with Obama and company is to invite “the boot” on their necks, so reminiscent of dictatorial governments as Obama and cronies doth “sentence first — verdict afterwards.” 
Surely, “it would be so nice if something made sense for a change,” said Alice, but in Obamaworld, if one wants to deliberately undermine this country, everything he does leans in that direction. As the Duchess exclaimed, “the moral of that is — the more there is of mine, the less there is of yours.” The next generation of Americans is already burdened with the financial debacle of a $15-trillion debt with no end in sight as the federal government becomes as bloated as Tweedledee and Tweedledum. Obama’s economic plan has not improved the country, but when “four times five is twelve, and four times six is thirteen,” math takes on a wholly new and original meaning as this president confiscates money without “due process of law.”
Knowing full well that his programs could do nothing but fail because they are not sustainable, Obama sets the stage for frustration and anger. He pits groups against each other rather than open up a truly free-market economy where people would have a chance to succeed. Rile up the crowd — distract them from the issues and engage in constant polemic. Sales on new homes in May plunged 33%, but all is well in Obama Wonderland!
Indeed, after forty years of federal entitlement, there are too many Americans who may have vaguely remembered ideals like responsibility and individual initiative, who used to “know who [they were] when [they] got up this morning, but … must have been changed several times since then.” Segments of Americans have lost their fundamental moorings or were never taught about the greatness of America and are now mesmerized by the empty slogans and the articulate nonsense of this president and the congress.
Jean-Francois Revel in his book How Democracies Perish wonders how “the citizens of democratic societies [will] find reasons to resist the enemy outside if they are persuaded from childhood that their civilization is merely an accumulation of failures and a monstrous imposture. … And that attack, which is being waged with unexampled vigor [and] scope … is catching the democracies in a state of intellectual impotence and political indolence” (10).
Our history books censure the dangers of totalitarianism and falsify and embellish history, and there is no reprobation. Obama stands by as America is demeaned, and all the while the adoring crowds still believe the emperor is wearing clothes. Their gullibility or lack of facts is mind-boggling. Thus, Obama has learned well the advice of the Queen: “Be what you would seem to be — [or] if you’d like it put more simply –‘Never imagine yourself not to be otherwise than what it might appear to others that what you were or might have been was not otherwise than what you had been would have appeared to them to be otherwise.'”
Will democracy “turn out to be have been a historical accident,” as Jean Francois Revel wrote?
 “Oh my ears and whiskers, how late it’s getting,” said Rabbit!
Active in the 1970s writing campaign to free Russian Jewish refuseniks, Eileen continues to speak out against tyranny. She can be reached at middlemarch18@gmail.com.

You can’t fool Mother Nature, Flies know where B__ S___ comes from

You can’t fool Mother Nature

Flies know where B__ S___ comes from

The Next Big Crisis: State Bankruptcies

The Next Big Crisis: State Bankruptcies

Posted By Dick Morris On June 23, 2010 @ 12:01 am In FrontPage | 7 Comments

Many say that the situation in Greece is a harbinger of what is coming to the United States. They are right. But first it will come to states like New York, California and Michigan, which are stretched way beyond their means and deeply in debt.

Until now, the problems in these states have been papered over by federal aid. Essentially, Washington has relieved these states (and the local governments they fund) of their constitutional obligations to balance their budgets by giving them welfare checks in the nick of time. Barack Obama now seeks to pass $50 billion in additional welfare to the states.

But, since these federal funds are not necessarily recurring — and the jobs and obligations they fund are — they simply enlarge each year’s deficit hole and enable the states to go more deeply into the red.

As these deficits mount — particularly if a newly elected Republican House and/or Senate refuse to fund them — bondholders will get more and more nervous. Eventually, they will realize that the less solvent states are bankrupt and will refuse to buy their debt. Eyes in Sacramento, Lansing and Albany will turn helplessly to Washington to guarantee their debt, just as Athens turns to Berlin.

Republicans, if they control either or both Houses, should stand firm and insist that these states sink or swim on their own. America’s taxpayers will not take kindly to having to bail out other states — or even their own — to pay for years of reckless spending. Americans will swarm to the GOP and will hail its stand.

The time is long passed when a local newspaper can generate sympathy — even from its own readers and the state’s own citizens — with a headline like “Ford to New York: Drop Dead.” Now, people in other states (and even in the affected state) would stand up and cheer should the Republicans take so strong a position.

There is currently no legal procedure for a state government to go bankrupt.

Congress, especially if it is Republican in 2011, should pass a mechanism that permits states to discharge in bankruptcy their collective bargaining agreements and contracts with their municipal unions. Of course, this procedure would have to let school boards and local governments do likewise.

Obama will veto this bill, and a stalemate will ensue.

On the left will stand Obama, the unions and the Democrats demanding bailouts for the states and, truly, an end to our federal system of government. Once Washington guarantees state debt and spending, there will be no more state governance, only national rule.

On the right will stand a Republican Congress refusing to do so unless the states declare bankruptcy and cleanse themselves of the union agreements that got them into trouble in the first place. The GOP will point out that state funding is leaking as surely as the Deepwater Horizon oil well and polluting our nation’s balance sheet as badly in the process.

The money will run out. States, school boards and localities will stop sending out checks. Emergency state funding may keep schools open, prisons locked, and police and fire services running, but otherwise all hell will break loose.

Something will give in this national game of chicken. If it is the states and Obama that blink first, we will free our local governments of the grip of municipal unions, their rigid work rules and their unaffordable pensions. If the Republicans blink first, they will forfeit their right to represent the American people, having backed down from the challenge of our times.

This Armageddon looms in 2011, presenting us with either an opportunity to reform our government in fundamental ways or to set in stone our path to an Athens-esque meltdown.