“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

No One’s Capital Is Safe in Obama’s America

No One’s Capital Is Safe in Obama’s America

By Claude Sandroff

Obama’s poorly coded message to investors is to take your money out of America and keep it out. Whether through excessive taxation, suffocating over-regulation, or thuggish confiscation, the lesson to be drawn by anyone with excess capital is to look for friendlier places to put it to work.
The list of friendlier places excludes North Korea, Venezuela, and Iran for the time being, but almost everywhere else qualifies. Russia’s president spent several days in Silicon Valley recently looking for adventurous investors and came away with a $1B commitment from Cisco Systems. For Cisco, sitting on a cash hoard of $30B, with years of experience partnering with the burgeoning Russian venture capital industry, the decision was probably not a very tortured one. And what a perfect opportunity for Cisco’s CEO John Chambers to keep his cash as far from Obama’s collection agencies as possible. 
President Medvedev promises Cisco a capital gains tax rate of zero; President Obama promises to retire the evil George Bush capital gains rate of 15% and increase it to 20% in 2011. Cisco is merely telecasting to anyone who wants to tune in that Russia is taking advantage of Obama’s lurch towards socialism (or worse). While Russia is portraying itself as a stable bastion for capitalists, America is increasingly seen as the land that mauled Chrysler and GM bondholders. While erstwhile command economies are liberalizing, America under Obama is nationalizing. The lesson is clear: Don’t leave cash within the American financial system, earning minimal returns, with the fear that at any moment your assets can be confiscated or redistributed by a lawless and capricious federal government.
When will Obama decide that Cisco (or Wal-Mart, or Apple, or Google, or any other successful enterprise) is not paying its “fair share”? Aren’t the profit margins earned by Cisco on its routers — sometimes approaching 70% — too rich, or even obscene? Aren’t these gains, in essence, nothing but windfall profits resulting in the eventual gouging of the average American internet subscriber? Cisco might not drill in the Gulf of Mexico for its profits, but man-made disasters could await it too, in the form of arbitrary, BP-like shakedowns of its hard-earned wealth. Why risk shakedowns in gangland Obama when a much more competent criminal like Putin will guarantee your investments?
Cisco is not the only company sitting on a gigantic cash cushion. All told, the balance sheet cash for the non-financial segment of the S&P 500 totals around $1 trillion. Businesses sit on these huge asset cushions and accept earning virtually nothing in real terms because risks are too high to consider anything else. 
In 2011, one of the largest tax increases in American history goes into effect. Not only do capital gains rise, but so too does the payroll tax, the income tax, and the estate tax. And even then, businesses large and small, while in their final financial death throes, will have nothing to look forward to other than the doom of ObamaCare and the unknown costs that Obama will attempt to afflict via cap-and-trade and a European-style value-added tax.
Fears are also emerging about the eventual burden imposed on all of us by dozens of states virtually bankrupt, especially if the federal government structures bailouts for those states deemed too big to fail. Unfortunately, the biggest and most likely to fail — California, New York, and Illinois — are Democrat and union fortresses that Obama will not let topple.
These and many other states have already been thrown a life jacket during the last near-trillion dollar stimulus in the form of unemployment insurance and other transfer payments. But the effects of those financial stimulants are beginning to wear off, and the federal drug dealer has little inventory left — except for massive money-printing.
Inflation is almost the last strategy left for the Federal Reserve, having driven short-term interest to zero and purchased all the treasuries, agency, and mortgage debt thrown its way.
Fears of excessive taxation and unpredictable costs are muting American entrepreneurial animal spirits. These fears are likely at the root of our persistently high unemployment. The issue too often is not lack of loan supply to launch a new enterprise, but a lack of demand for the loans to get started. Strangling business creation translates into no new job creation. If you launch a business today and organize as an S-Corporation, how can you be even reasonably sure will you take home enough in profits to justify the initial risk of the undertaking? And if you were successful enough to reach the revenue heights of $250K, Obama would target you as a capitalist predator and promote you to the highest tax bracket.
In contrast to Jefferson’s goal of preserving “a model of government, securing to man his rights and the fruits of his labor, by an organization constantly subject to his own will,” our current administration is brutally determined to transform government into an organ that redistributes those fruits to its cronies. The reaction of sane, rational Americans to these perverse incentives is not to create or hire or produce. Instead, existing businesses and potential founders of new ones are hunkering down, hoping to wake up from this national nightmare in 2010 and 2012 with some of their wealth still intact.
Claude can be reached at csandroff@gmail.com.

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.

Obama’s trip to Ohio cost ‘between $500K and $1 million’; Spoke for just 10 minutes…

Obama Jokes About Biden’s “Big F-ing Deal” Comment

 

Posted by Mark Knoller

President Obama at the groundbreaking for 10,000th Recovery Act-funded road project in Columbus, Ohio, June 18, 2010.

(Credit: CBS/Mark Knoller)

COLUMBUS, Ohio – Trumpeting the 10,000th road project funded by his Recovery Act, President Obama borrowed two of three words made famous in March by Vice President Biden.

This is a “big….deal,” said Mr. Obama, pausing for effect between the two words between which Biden had inserted an expletive in an overheard whisper three months ago.

“Today I return to Columbus to mark a milestone on the road to recovery,” the president said. “That’s worth a big round of applause.”

The White House staged the event here in the political battleground of Ohio, where Democrats face tough congressional races this fall, including a fight to win the U.S. Senate seat being vacated by the retiring Republican George Voinovich.

Flanked by construction workers in helmets and yellow safety vests, Mr. Obama tried to score political points via the many jobs programs funded by the Recovery Act.

“More than 100,000 Ohioans are at work today as a result of these steps,” he said.

But even before Air Force One landed here, Republicans were trying to put their own spin on the president’s visit.

House GOP Leader John Boehner, who represents Ohio’s 8th Congressional District, said the administration’s stimulus program has fallen short of its promises. He cited new numbers from the Ohio’s Department of Job and Family Services that showed the state’s unemployment rate “remained above 10 percent for the 14th consecutive month in May:”

The White House yesterday launched a campaign called “Recovery Summer,” in conjunction with thousands of new jobs programs funded by the Recovery Act being initiated. But Boehner portrays the campaign as bogus.

“This will be no ‘recovery summer’ for the more than 100,000 Ohioans who have lost their jobs since the ‘stimulus’ was enacted,” he said in a written statement meant to undermine Mr. Obama’s visit.

In his brief remarks delivered in the middle of a street closed for his appearance, Mr. Obama asserted the recession is easing.

“Our economy, which was shrinking by six percent when I was sworn in, is now growing at a good clip, and we’ve added jobs for six out of the past seven months in this country,” he said.

But at the same time he said he was “under no illusion” that the recession was over.

“There are still too many people here in Ohio and across the country who can’t find work; many more can’t make ends meet,” he said.

The project he came to spotlight is funded by $15 milllion from the Recovery Act to rebuild roads in the area around Nationwide Children’s Hospital. The White House says the program will create over 300 construction jobs.

Mr. Obama spoke for just ten minutes and was on the ground in Ohio for just over an hour. And though his appearance was billed as official and not political, he did use his remarks to deliver attaboys to some of the Democratic politicians here including the Governor, who is up for re-election.

“You also got one of the best governors in the country in Ted Strickland,” the president said at the start of his remarks.

Strickland faces a challenge for his job in November from former GOP Congressman John Kasich, who was not at the Recovery Act event. Neither was Boehner.

The trip Columbus probably cost taxpayers between $500,000 and $1 million.

Air Force One alone bills out at $100,000 per hour, and the round trip is nearly two hours. Adding to the cost are military aircraft to carry limos and secret service vehicles, Marine One on standby, Secret Service, local police and other factors

The Taxman Cometh

The Taxman Cometh

May 11th, 2010

by  Grover Norquist, Human Events

President Obama is quoted in Jonathan Alter’s new book, The Promise: President Obama, Year One, explaining how he lost control of the political momentum early in his administration, claiming that the unanimous Republican opposition in the House of Representatives to his stimulus spending bill “set the tenor for the whole year.”

“That helped to create the tea-baggers and empowered that whole wing of the Republican Party to where it now controls the agenda for Republicans.”

Because the Democrat party was alone in passing the stimulus and then the budget and then the healthcare spending bill, the Democrats alone own the increasingly unpopular issue of overspending.

Obama is determined not to repeat this mistake when he moves to massively raise taxes after the 2010 election.

He needs cover, a useful idiot, a high profile Republican who can stand with him in the Rose Garden when he endorses a VAT and higher income taxes and energy taxes. He wants Republican fingerprints on the murder weapon. The Democrats are stuck with their ownership of overspending. They want to share the blame for the taxes to pay to continue their overspending.

Read More:

Obama and Biden to Celebrate Earth Day by Tying Up New York Air Traffic

Obama and Biden will board separate jets in Washington on Earth Day morning to fly 250 miles up to New York, where they will land at separate airports to attend separate events within a few miles of each other… Jets will be forced to circle and burn more fuel as they wait for the VIPs to come and go… 

Obama and Biden to Celebrate Earth Day by Tying Up New York Air Traffic

April 21st, 2010 • By Matt Molnar Share/Bookmark

 

On a day when many Americans will be reflecting upon how they can reduce their impact on the environment, President Barack Obama and Vice President Joe Biden will board separate jets in Washington on Earth Day morning to fly 250 miles up the east coast to New York, where they will land at separate airports to attend separate events within a few miles of each other.

The parallel visits of Air Force One (a 747/VC-25 aircraft) and Air Force Two (a 757/C-32A aircraft) will delay dozens, if not hundreds of commercial flights at Kennedy and LaGuardia and other nearby airports as no-fly zones are implemented. Jets will be forced to circle and burn more fuel as they wait for the VIPs to come and go. Their security contingents consisting of dozens of cars, SUVs and helicopters will burn even more. Throw in thousands of commuters’ cars and delivery trucks sitting idle in traffic as law enforcement closes large swaths of the city and you have yourself a very Earth-unfriendly day.