Many people hope that if Republicans can take back at least one house come November, that some degree of sanity can be restored and our fiscal house can be put in order. But perhaps it will already be too late.
In addition to the health-care bill, which will be nearly impossible to repeal before 2012 or even then, there is the looming humongous tax increase coming our way before the new congress can even be sworn in. IBD tallies:
But as of midnight Dec. 31, the death tax returns — at a rate of 55% on estates of $1 million or more. The effect this will have on hospital life-support systems is already a matter of conjecture.
Resurrection of the death tax, however, isn’t the only tax problem that will be ushered in Jan. 1. Many other cuts from the Bush administration are set to disappear and a new set of taxes will materialize. And it’s not just the rich who will pay.
The lowest bracket for the personal income tax, for instance, moves up 50% — to 15% from 10%. The next lowest bracket — 25% — will rise to 28%, and the old 28% bracket will be 31%. At the higher end, the 33% bracket is pushed to 36% and the 35% bracket becomes 39.6%.
But the damage doesn’t stop there.
The marriage penalty also makes a comeback, and the capital gains tax will jump 33% — to 20% from 15%. The tax on dividends will go all the way from 15% to 39.6% — a 164% increase.
Both the cap-gains and dividend taxes will go up further in 2013 as the health care reform adds a 3.8% Medicare levy for individuals making more than $200,000 a year and joint filers making more than $250,000. Other tax hikes include: halving the child tax credit to $500 from $1,000 and fixing the standard deduction for couples at the same level as it is for single filers.
Letting the Bush cuts expire will cost taxpayers $115 billion next year alone, according to the Congressional Budget Office, and $2.6 trillion through 2020.
But even more tax headaches lie ahead…
The Article then details the various tax hikes that come later on with health-care.
As long as Obama is President, restoring the Bush tax cuts and repealing all the health-care tax hikes will be virtually impossible even if we took back both houses in November. By inauguration day 2013, there might not be an economy left to save.
This is what turns recessions into depressions.
Stock up on canned goods, ammo, and beef jerky while you can still afford it.
July 23, 2010 at 1:29 pm
I'm the author of the ATR piece. It just goes to show you that liturgical exactitude can lead to good politics.
July 23, 2010 at 1:44 pm
The following article proves that first and foremost, politicians will sacrifice their principles just to stay in office.
Dems may keep Bush tax cuts
They might do the right thing for the wrong reason, but in this case, should it happen, I don't care.
From the article:
"President George W. Bush’s tax cuts will expire at the end of the year unless Congress acts to delay their sunset.
"Some Democrats are now arguing forcefully that a delay is a win-win plan that would help the federal budget without hurting the economy.
"Wealthy families would not have an incentive to cut back on spending and budget writers could assume an inflow of tax funds in future years, making five- and 10-year budget projections look less scary."
Even if this were to happen, it'd have the effect of a bikini in a snowstorm, given the onslaught of all the other punitive tax hikes. It goes to show, though, that the Dems know tax cuts spur growth and increase tax receipts, and that tax hikes curb growth and lead to a decrease in revenue.
Hypocrites.
July 23, 2010 at 2:44 pm
We should all be thankful they have abandoned Cap and Trade, which would have all but destroyed the housing market, as well as saddling us all with new taxes.
I have for months been appalled at those who seem relaxed in the notion of corrections after the mid-term elections. First of all, some legislation is impossible to reverse; consider the amnesty for illegals that might have been passed. Second, even if Republicans regain control of the Congress, they will need 2/3 majorities to pass things over the President's unwillingness to sign. Third, Congress can only fix the problems by first repealing all that has been passed since Obama took office, a task they may not relish as much as passing their own favorite legislation. Finally, if the Republicans regain control, and if they repeal all this mess, they must then a) reduce taxes, b) seriously consider and hopefully pass the Fair Tax, and c) stop new spending and reduce current spending.
Pray for our country, folks, pray without ceasing.
July 23, 2010 at 2:44 pm
Yeah, so without the tax hikes the gov't could become insolvent. Damned if you do, damned if you don't sorta thing. Stock up on beef jerky anyways… I think were in for a long ride.
July 23, 2010 at 3:02 pm
I'm also afraid it may be too late. We really need a miracle. Bill Meyers: AMEN!!
Meanwhile I will soon be taking reservations for "Jimbo's Vast Bunker, Roman Catholic Church and Underground Water Park" (BYOBJ – Bring Your Own Beef Jerky).
And if you haven't seen the Polish church in the salt mine in Krakow, you MUST check it out here:
http://www.khulsey.com/travel/poland_wieliczka_salt_mine.html
That's what I call art!
July 23, 2010 at 5:50 pm
The Dems aren't the only ones to blame for this…those taxes wouldn't be looming if the cuts hadn't had a sunset clause in the first place. The Republicans, of course, can argue that it was the only way to get the cuts passed in the first place, but come on. They took a huge hit in the media by passing the cuts, with or without the sunset clause, and (IIRC) it was STILL an almost completely partisan vote.
The Republicans gave us this ticking time-bomb 9 years ago, and ignored it in the intervening time. Would it not have been possible, in say 2005, to propose an amendment to the legislation that would remove the sunset clause?
I'm unhappy with both parties, but I'm actually more unhappy with the Republicans. I don't expect Democrats to be for lower taxes.
July 23, 2010 at 8:39 pm
Usually I'm all over any excuse to stock up on beef jerky and beer (hugely popular bartering item), not to mention toilet paper, but the future looks even bleaker – financially, at least – now that I've read this post. Thanks. 😉
July 23, 2010 at 9:58 pm
I think the real heroes in this crisis are the actors and actresses of Hollywood. With so much bad music and art, it's easier to save than ever!
Shoot, I save a ton of money just arguing with my liberal friend over why I refuse to watch "Avatar."
July 27, 2010 at 2:42 pm
Bill Meyer, 'We should all be thankful they have abandoned Cap and Trade..'. You might want to put a hold on that gratitude. This administration has ways of going around congress when things can't get shoved through there. In this case, keep an eye on the EPA. They will be able to make us pay for the air we breathe and the CO2 we emit.
July 27, 2010 at 8:07 pm
There is a growing number of Democratic lawmakers who are waking up to the danger 2011 and 2012 pose for the nation. With the expiration of the Bush Tax Cuts a $1.8 trillion levy will be put on our GDP. Our GDP is currently $12 trillion. After 2011, it will be reduced to less than $11 trillion. Don't think that the wealthy will sit idly by. And the number of small and large businesses will be reduced accordingly.
Arthur Laffer and other economists predicted last autumn that 2010 would see both positive GDP growth and a comeback in the stock market. Thier thinking was that both businesses and individuals would spend what they could in 2010 in preparation for the tax cut expirations. Laffer says that if the tax cuts do expire we will be back in recession buy the summer of 2011.
July 27, 2010 at 10:55 pm
Time to buy a plot of land deep in the country, get a generator, septic tank, and a well, and live off the grid for a while…