On January 1, 2011, the largest tax hikes in the history of America are set to take effect. They will hit families and small businesses in three great waves. (read this newsletter to the end, so you see all three waves)...
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. AS A RESULT: 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 as Itemized deductions and personal exemptions will again phase out.
Higher marginal tax rates will go into effect:
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) begins with 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.
Death Tax is Reinstated:
Due to a bit of a quirk in the present IRS Regulations, there is no death tax in 2010. HOWEVER, for those who die on or after January 1, 2011, there is a 55 percent Federal death tax rate on estates over $1 million. If you think this doesn't affect many folks, you are wrong... Think of the farmers who don't make much money. Their land, which they purchased years ago with after-tax dollars, is now worth a lot of money. Their children may have to sell the farm, which is often their livelihood, to pay the estate tax. Think about your own assets. Maybe you own some real estate, or a business that doesn't make much money, but the building and equipment are worth $1 million. Your Children and Grandchildren may inherit the $1 million business tax free, but if you own a home, stock, cash worth $500K on top of the $1 million business, then they will owe the Federal Government $275,000 cash! It's simple math, 55% of the value of the deceased persons assets over $1 million! A normal, middle class, person who dies, Leaving behind two homes, a business, and a retirement account, could easily pass along a huge death tax bill to their loved ones and not many families have that kind of cash sitting around waiting to pay an oppressive Estate Tax?
Higher tax rates on savings and investments:
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.
ARE YOU SCARED YET?
The Second Wave is 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" 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, 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 the 2011 tax rules, FSA dollars can not be used to pay for this type of special needs education.
The HSA (Health Savings Account) 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.
The Third Wave:
When Americans prepare to file their tax returns in January of 2011, they'll be in for some nasty surprises.
The Alternative Minimum Tax:
Beginning in 2011 the AMT won't be held harmless and many tax relief provisions will have expired.
According to the Tax Policy Center, the AMT will ensnare over 28 million families, up from 4 million last year. Congress' failure to index the AMT will lead to an explosion of AMT taxpaying families. These families will have to calculate their tax burdens twice and pay taxes at the higher level.
BUSINESS Tax Hikes:
There are literally scores of tax hikes on all types of business enterprises that will begin on January 1, 2011.
One of the biggest and most crippling is the loss of the "Research and Experimentation tax credit, " which helps to encourage the development of many new technologies and products.
Small business expensing will be slashed and 50% expensing will entirely disappear. Rather than slowly deducting, ("depreciating") most smaller businesses can "expense" equipment purchases up to $250,000. This will be cut all the way down to $25,000. Larger businesses can currently expense half of their purchases of equipment. Beginning in January of 2011, 100% of the cost of upgraded equipment will have to be "depreciated."
There are many, many more Anti-Business policies in the Obama-Pelosi-Reid Pipeline, but combining high marginal tax rates with the loss of the 2001 and 2003 tax relief bills will cost thousands of jobs and surely slow the already sluggish, American economy.
Tax Benefits for Education and Teaching are significantly reduced:
The deduction for tuition and fees will not be continued
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 will no longer be an option. Imagine how this will effect THE ROTARY FOUNDATION, or your CHURCH.
Additional PERSONAL TAXES:
Worse news, I think even the well meaning liberals who backed this administration will be astonished when they realize our Employer supplied Medical insurance will be included as INCOME on our W2's! This big surprise will come next year, and it's something that 99% of us had no idea was included in the "new and improved" health care legislation, that was shoved down America's throat..
Starting in 2011, (next year folks), the W-2 tax form you receive from your employer will be increased to show the value of whatever health insurance you are given by the company. It does not matter if that's a private concern or governmental body of some sort. If you're retired? So what! Your gross will go up by the amount of insurance you get and you will be required to pay taxes on a large sum of money that you have never even seen. Take your 2009 tax form you just finished and see what $15,000 or $20,000 additional gross does to your tax debt. That's what you'll pay on in 2011. For many, it will puts you into a new higher bracket so it's even worse.
If you don't believe me, here's the regulation straight from the bill.. Summaries, page 25 of 29:
TITLE IX REVENUE PROVISIONS- SUBTITLE A: REVENUE OFFSET PROVISIONS-(sec. 9001, as modified by sec. 10901) Sec.9002 "requires employers to include in the W-2 form of each employee the aggregate cost of applicable employer sponsored group health coverage that is excludable from the employees gross income."
How did you think the government would be able to buy insurance for the15% that don't have insurance? AND it's only part of the tax increases.
Why am I sending you this? People have the right to know the truth because an election is coming in November!
For that reason I hope you talk about this with friends and family and forward this to every single person you know regardless of political affiliation,
I urge you to make it your personal RESPONSIBILITY to preserve American values.
This effort is focused on sacrifice to protect and defend the Constitution of the United States against all enemies foreign and domestic.
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