Bush Tax cuts, facts or fiction?

SpurHunter · Aug 23, 2010

I have not had time to research all the facts here, if you have proof that any part of this is not correct, please post so I know. If all of this IS correct, a lot more than conservatives will be upset and ready to "throw the bums out". 

<div><div><div><div style="margin-bottom: 12pt"><div><div>In just six months, on January 1, 2011, 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, here’s what happens... (read it to the end, so you see all three waves)...


</div>First Wave:

Expiration of 2001 and 2003 Tax Relief
In 2001 and 2003, the GOP Congress enacted several tax cuts forinvestors, small business owners, and families.
These will all expire on January 1, 2011.


Personal income tax rates will rise.

The topincome tax rate will rise from 35 to 39.6 percent (this is also the rateat which two-thirds of small business profits are taxed). Thelowest rate will rise from 10 to 15 percent. All the rates inbetween will also rise. 
Itemized deductions and personal exemptionswill again phase out, which has the same mathematical effect as highermarginal tax rates. 

The full list of marginal rate hikes is below:

</div></div></div></div></div><ul><li style="color: black" class="MsoNormal">The 10% bracket rises to an expanded 15%

<li style="color: black" class="MsoNormal">

<li style="color: black" class="MsoNormal">The 25% bracket rises to 28%

<li style="color: black" class="MsoNormal">

<li style="color: black" class="MsoNormal">The 28% bracket rises to 31%

<li style="color: black" class="MsoNormal">

<li style="color: black" class="MsoNormal">The 33% bracket rises to 36%

<li style="color: black" class="MsoNormal">

<li style="color: black" class="MsoNormal">The 35% bracket rises to 39.6%

[/list]<div style="margin-bottom: 12pt"><div><div>

Higher taxes on marriage and family.
The"marriage penalty" (narrower tax brackets for marriedcouples) will return from the first dollar of income. 
The child taxcredit will be cut in half from $1000 to $500 per child. 
Thestandard deduction will no longer be doubled for married couples relativeto the single level. 
The dependent care and adoption tax creditswill be cut.

TheReturn of the Death Tax.
This yearonly, there is no death tax. (It’s a quirk!)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, a business,a retirementaccount,could easily pass along a death tax bill to their loved ones. Think of the farmers who don’t make much money, but their land, which they purchased years ago with after-tax dollars, is now worth a lot of money. Their children will have to sell the farm, which may be their livelihood, just to pay the estate tax if they don’t have the cash sitting around to pay the tax. Think about your own family’s assets. Maybe your family owns real estate, or a business that doesn’t make much money, but the building and equipment are worth $1 million. Upon their death, you can inherit the $1 million business tax free, but if they own a home, stock, cash worth $500K on top of the $1 million business, then you will owe the government $275,000 cash! That’s 55% of the value of the assets over $1 million! Do you have that kind of cash sitting around waiting to pay the estate tax?


Higher tax rates on savers and investors.
The capital gains tax will rise from 15 percent this year to 20 percent in2011. 
The dividends tax will rise from 15 percent this year to 39.6percent in 2011. 
These rates will rise another 3.8 percent in 2013.


Second Wave:

</div>
Obamacare
There are over twenty new or higher taxes in Obamacare. Several will first go into effect onJanuary 1, 2011. They include:

The "Medicine Cabinet Tax"
Thanks to Obamacare, Americans will no longer be able to use healthsavings account (HSA), flexible spending account (FSA), or healthreimbursement (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). Thereis one group of FSA owners for whom this new cap will be particularlycruel and onerous: parents of special needs children. 

There arethousands 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 childrenin Washington , D.C. ( National Child Research Center ) can easily exceed $14,000 per year.
Under tax rules, FSA dollars can not be used to pay for this type of specialneeds education.

The HSA (Health Savings Account) Withdrawal Tax Hike.
This provision of Obamacare increases the additional tax on non-medical early withdrawalsfrom an HSA from 10 to 20 percent, disadvantaging them relative to IRAsand other tax-advantaged accounts, which remain at 10 percent.
Third Wave:

</div>
The Alternative Minimum Tax(AMT) 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 beheld 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 toan explosion of AMT taxpaying families-rising from 4 million lastyear to 28.5 million. These families will have to calculate theirtax burdens twice, and pay taxes at the higher level. The AMT wascreated 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. 

Thiswill be cut all the way down to $25,000. Larger businesses cancurrentlyexpense 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 takeplace. The biggest is the loss of the "research andexperimentation tax credit," but thereare many, many others. Combining high marginal tax rates withthe 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 creditsfor education will be limited. 

Teachers will no longer be able todeduct classroom expenses.

Coverdell Education Savings Accountswill be cut.

Employer-provided educational assistance iscurtailed. 

The student loan interest deduction will be disallowedfor 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. 

Thiscontribution also counts toward an annual "required minimumdistribution." This ability will no longer be there.


PDF Version Read more: <http://www.atr.org/six-months-untilbr-largest-tax-hikes-a5171%3E;;http://www.atr.org/six-months-untilbr-largest-tax-hikes-a5171#%23ixzz0sY8waPq1

And worse yet?

Now, yourinsurance will be INCOME on your W2's!
One of the surpriseswe'll find come next year, is what follows - - a little"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 beastonished!
Starting in 2011, (next year folks), your W-2 tax form sent byyour employer will be increased to show the value of whateverhealth insurance you are given by the company. It does notmatter if that's a private concern or governmental body ofsome sort. 

If you're retired? So what... your grosswill go up by the amount of insurance you get.
You will be required to pay taxes on a large sum of money that youhave never seen. Take your tax form you just finishedand see what $15,000 or $20,000 additional gross does to yourtax debt. That's what you'll pay next year. 

Formany, it also puts you into a new higher bracket so it's evenworse.


This is how the government is going to buy insurance for the15% that don'thave insurance and it's only part of the tax increases.
Not believing this??? Here is a research of thesummaries.....
On page 25 of 29: TITLE IX REVENUEPROVISIONS- SUBTITLE A: REVENUE OFFSET PROVISIONS-(sec. 9001,
as modified by sec. 10901) Sec.9002 "requires employersto include in the W-2 form of each employee the aggregate cost ofapplicable employer sponsored group health coverage that is excludable from the employees gross income."


-Joan Pryde is the senior tax editor for the Kiplinger letters.-Go to Kiplingers and read about 13 tax changes thatcould affect you. Number 3 is what is above.
</div>

beetlespin · Aug 23, 2010

Its going to be bad. This will lead to a much more severe recession than we just came out of. Actually I don't even think we are out of it yet. I bet a ton of people will drop their company funded insurance plans to get the free govt plan.

Bigger Cat · Aug 23, 2010

Spur, great reading. Like you I haven't had time to research this completely for sure. I did have the chance to talk with the lady that does my taxes every year. She said it was ugly for all. Especially the folks on the lower side that can't really afford to pay what they have to already. She did mention the insurance portion that will have to be reported as income & the FSA account eliminations. For instance, if you spend $50 a week already out of your pocket and you employer tacks another $200 on for your insurance a week, that means you just earned another $2,600 a year that you have to pay taxes on. Sucks for sure. That is what we get though. Most Americans can be glad they voted for CHANGE. Not I friends, Not I. I am looking forward to the commentary on this one though. Well written Spur . Thank you friend.

Bprice · Aug 23, 2010

I've made 2 or 3 posts about this, and they have gotten little attention.

Congress is "supposed" to be working this for families under $250k, but I haven't heard much action out of congress yet.

minner · Aug 23, 2010

Bprice - 8/23/2010 10:06 AM

I've made 2 or 3 posts about this, and they have gotten little attention.

Congress is "supposed" to be working this for families under $250k, but I haven't heard much action out of congress yet.

There is probably one of two reasons people haven't replied. One, folks are in complete astonishment and had no idea............the other, folks would just be putting their foot in their mouth if they commented.

Bubbakat · Aug 23, 2010

Or they get chastised by certain groups of people on here. This is going to hurt my wife and I real good. We are retired and any thing we have had will be swept up by taxes. I think I will live off the democratic government and go for fed housing.

Bprice · Aug 23, 2010

The funny thing to me is the Democrats, aka the Champions of The Little Man, are going to let these cuts expire which will have the largest effect on the lowest income earners. 10% to the 15% bracket... that'll hurt that group much more than a 4.4% hike on the "rich"

Bfish · Aug 23, 2010

Here is Joan Pryde's updated list, not nearly as sinister:

http://www.kiplinger.com/businessre.../health-care-reform-tax-hikes-on-the-way.html

Sniperchoke · Aug 23, 2010

Bfish - 8/23/2010 12:48 PM

Here is Joan Pryde's updated list, not nearly as sinister:

http://www.kiplinger.com/businessre.../health-care-reform-tax-hikes-on-the-way.html

I especially like #2. Not many small businesses I know that will average less than 50,000 on payroll when the owner is on payroll. What a bunch of theives our gov't is.

Bigger Cat · Aug 23, 2010

I screwed up in my first post. Instead of $2.600 additional income it will be $10,400 if your employer chips in an additional $200 a week for our healthcare. I was just so pissed when I got to thinking about it I lost my cash thoughts. Just like my cash will be lost paying for freakin Obamacare. I don't take them now but I see blood pressure meds in my future.

Bfish · Aug 23, 2010

Sniperchoke - 8/23/2010 1:28 PM

Not many small businesses I know that will average less than 50,000 on payroll when the owner is on payroll.

That $50,000 is average annual wage. I don't know many businesses with fewer than 25 employees that have all the employees make more than 50k per year. For example an owner with 5 employees, can take home 150k and each employee still make 29k and still not meet the 50k average annual payroll.

Sniperchoke · Aug 23, 2010

Bfish - 8/23/2010 2:31 PM

Sniperchoke - 8/23/2010 1:28 PM

Not many small businesses I know that will average less than 50,000 on payroll when the owner is on payroll.

Click to expand...

That $50,000 is average annual wage. I don't know many businesses with fewer than 25 employees that have all the employees make more than 50k per year. For example an owner with 5 employees, can take home 150k and each employee still make 29k and still not meet the 50k average annual payroll.

Well you just don't know many businesses. How about a Doc's office where they make 200,000 his nurse makes 50,000, office manager 60,000 and receptionist 30,000. Does it still seem fair? If you are going to do a tax reduction do it across the board. Don't cherry pick. Gov't is still a bunch of thieves. And I think it said 10 or less employees not 25 but I could be mistaken can't get the link to pull up again.

tie1on · Aug 23, 2010

Just another step towards communism. Those who don't "PULL THEIR OWN WEIGHT" and are a burden to society like the sick, the elderly and the poor are expendable and need to be weeded out. But first, use them to get elected and get into power then stab them in the back!

Bfish · Aug 23, 2010

Sniperchoke - 8/23/2010 3:18 PM

Well you just don't know many businesses. .

I do know how to read though...

2. The new law gives small firms tax credits as incentives to provide coverage, starting this tax year. Employers with 10 or fewer workers and average annual wages of less than $25,000 can receive a credit of up to 35% of their health premium costs each year through 2013. The credit is phased out for firms larger than that and disappears completely if a company has more than 25 employees or average annual wages of $50,000 or more.

Beginning in 2014, the system changes. The law requires each state to establish a health insurance exchange -- a marketplace where individuals, the self-employed and small businesses can buy health insurance coverage. The government-regulated exchanges would offer insurance policies with different levels of coverage and price tags. Small firms that sign up with one of the health exchanges to be created can receive a credit of up to 50% of their costs -- with the same phaseouts for average income and size as the earlier program. The credit disappears after 2015.

Bfish · Aug 23, 2010

http://www.kiplinger.com/businessre.../health-care-reform-tax-hikes-on-the-way.html

Or do a search on Joan Pryde, April 5, 2010

WLG · Aug 23, 2010

So will the Bush tax credits expire or not.??...if they do then i am going to see a huge hunk of my hard earned money go to Uncle Sam.....I think I need it much worse!!

beetlespin · Aug 23, 2010

I have a feeling they will all expire.

Sniperchoke · Aug 23, 2010

beetlespin - 8/23/2010 7:49 PM

I have a feeling they will all expire.

I wish some of the old farts in Washington would expire. Some of them are traitors if you ask me.

Eyeman2 · Sep 6, 2010

One main point allready gone into effect is; any business, small/large, home based etc, if you have a single expenditure of $600 or more, you must report this on an income tax form. What this does is track your every move, purchasing.
I recently purchased some items at $340 per case, and was told I could get free shipping if I bought 2 cases, saving me $55 per case,(ship)but then I would have to report the $680 purchase to the feds.Now I'm NOT doing anything illegal, but then the fed wants to know what I did with all that stuff and why I'm not showing more profit on my sales reciepts.
Guys/Gals, they JUST want to keep track of you, want their pint of blood,no matter what you do, it's a paper trail. Palidin Press has some very good books on paper trails.
If the gov was responsible, then business wouuld not try to screw them and the public would not cheat on their taxes. Why should I be paying for gov retirement and bail outs for unions and big business, it's tax payer $$, not the governemnts $$.

Eyeman2 · Sep 6, 2010

P S...what I'm saying is....in one business I had a Coca Cola machine, supplied by CC...Now I could NOT buy cokes off the truck cheaper than I could buy them on sale @ certain chain stores. This is not a fair practice, my opinion, for Coke to sell cheaper to chain stores than to Mom & Pop. But why should I cut my bottom dollar and pay twice as much and make less profit, when I can buy cheaper and make more profit. Buy off the truck @ .40 cents, or buy from chain store @ .25 cents per can. The $600 reporting paper is wrong for most business. Tax cuts Work ...period. Proping up other people and business, does Not Work

Bush Tax cuts, facts or fiction?

Help Support Chattanooga Fishing Forum:

Well-known member

Well-known member

Well-known member

Well-known member

Well-known member

Well-known member

Well-known member

Well-known member

Well-known member

Well-known member

Well-known member

Well-known member

Well-known member

Well-known member

Well-known member

Well-known member

Well-known member

Well-known member

Well-known member

Well-known member

Similar threads