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Thread: Taxes

  1. #1
    Moderator idesign's Avatar
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    Default Taxes


    In just six months,

    the largest tax hikes in the history of

    will take effect. They will hit families and small businesses in three great waves on January 1,


    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.


    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

    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


    Third Wave: The Alternative Minimum Tax and Employer Tax Hikes


    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.

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  2. #2
    Moderator idesign's Avatar
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    Default The Tax Tsunami On The Horizon


    addition to the items above, this article lists some other new taxes to look

    for.> <br /> spx

  3. #3
    Phero Dude
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    Quote Originally Posted by idesign View Post
    In addition

    to the items above, this article lists some other new taxes to look for.



    Something that folks in the U.S. very seldome realize is that the top tax bracket...thats the 35%

    crowd...traditionaly pay less than 18% on average once all the various deductions are calculated. The other thing

    that people often forget is the "good old days" of taxation when taxes were higher. from 1936 to 1980 the top tax

    bracket never dropped below 70% and from 1950 to 1963 the top tax rate never dropped below 90%. read that


    The tax cuts that came durring the Reagan years werent realy tax cuts at all. In point of fact in

    the last six years of Reagan the top tax rate dropped to 35% but the number of taxes paid by americans went

    way up. There were over 2,000 new, seperate taxes added to the federal tax code to make up for the tax breaks that

    were handed out.

    In the good old days the high taxes were offset by allowing wealthy individuals to spend money

    (not to be confused with investing) and then count it as huge write offs. The spending was designed to create jobs

    and prevent the massive accumulation of wealth and as a general rule, it worked. Contrary to popular oppinion

    investing only creates jobs when an individual or a company invests in itself. When Wall Street invests in

    something it is seen as a good thing but in the long term is just another way for people to sweep money off the

    table.It works in the short term it works but long term it actualy costs jobs.

    What we realy need is a complete

    restructuring of the existing tax code rather than just raising or lowering existing taxes. As it is the federal

    government has over 68,000 pages of tax code currently active. There is absolutly nothing in this country short of a

    space shuttle that is complex enough to require 68,000 pages.

    Quick...stop me befor I go off on scocial

    "The wages of sin is death.But after taxes it's just sort of a tired feeling realy." -Ellen DeGeneres

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