Subscribe Feed (RSS)Obama administration seeks one trillion dollar stealth tax
This past Monday the Obama administration unveiled its 2011 budget, revealing that the president plans to trim more than one trillion dollars from the deficit over the next ten years. Unfortunately, those plans are being hatched on the back of middle-class taxpayers who may not know what has hit them until it is too late.
Lucky for you we have done our research and discovered that stealth tax hikes are in the offing with most every American expected to pony up. Big time.
Exploding Budget Deficit
Expect to pay more taxes in the years to come as certain deductions begin to disappear.
But before we take a look at how you will be impacted, consider this: President Obama is planning to spend an additional $1.7 trillion next year, pushing the deficit up by an additional $2 trillion. That will raise our national debt above $14 trillion (or is it $15 trillion?) making it even more difficult to service our nation’s debt in future years (see U.S. National Debt Clock).
The Obama administration has long promised to raise taxes, but only on the “rich” defined as people who make at least $250,000 per year. That figure was always suspect because if you happen to own a small business and your revenue is in quarter-million dollar territory, you will still get hit even if you pay yourself a much smaller salary.
Tax Rate Hikes
President Obama’s plan won’t be obvious to many Americans because he simply plans to allow a number of tax cuts put in place under the Bush administration to expire. What this means is people in the 35% tax bracket will be taxed at the 39.6% rate; the 33% rate will become 36%; while the 28% rate will rise to 31%.
Even lower income folks will be hit seeing their tax rate increase from 25% to 28%; the 10% tax bracket will be eliminated.
Investors Hit Hard
If you are part of the investing class—and who isn’t, mostly everyone owns shares these days—then you will get hit hard. The capital gains tax is expected to rise from 15% to 20% while the dividend tax will skyrocket from 15% to 39.6%.
The Alternative Minimum Tax (AMT) has been around for four decades now, but it has been a problem for millions of Americans as it wasn’t set up to be indexed to inflation. Under President George W. Bush, a “patch” was put in place to limit its impact, but that patch has already expired. Thus, a number of Americans will soon learn that they may owe more money this year.
The AMT may begin to affect people with incomes as low as the low 30s for single filers (mid-40s for joint filers), but even if the patch was put back in place, millions of middle class taxpayers will still be hit.
Perhaps the most eye-catching of the taxes set to expire are some of the ones that Americans have grown to expect each year including:
- $250 teacher credit for the purchase of school-related supplies.
- Tax on unemployment benefits. In 2009 the first $2400 was exempt.
- The tax deduction for college tuition and expenses, currently at $4000 will disappear.
- Itemizing taxpayers will lose an important option: you will no longer be permitted to deduct sales-tax payments instead of state and local income taxes.
- If you do not itemize your deductions, you will no longer be able to claim the standard deduction of $1000 for property taxes paid.
Reuters Reporting Fiasco
Much of the information included in this article was published by Reuters on Tuesday who pulled it hours later when Obama’s press secretary, Robert Gibbs, called Reuters and said that the information was a lie.
Reuters removed the article but not before it was disseminated to newspapers and other sources.
Reuters did not give a reason for why the article was removed other than to post the following message in its place: The story Backdoor taxes to hit middle class has been withdrawn. A replacement story will run later in the week. (see Reuters: Backdoor taxes to hit middle class)
We’ll share follow up details when that information becomes know including the Obama administration’s explanation. Congress will review the budget, make changes, and submit the final bill for the president to sign. The next fiscal year begins on October 1.
Tags: alternative minimum tax, backdoor taxes, Congress, Obama Administration, President Obama, Reuters, taxes
IRS Form 3800 (General Business Credit) is worth exploring as it gives businesses credits for a wide variety of reasons including making your facility accessible to the handicapped; for increasing your research activities; for using biodiesel and/or renewable diesel fuels; credits for your business’ contribution to select community development corporations; purchase of energy efficient appliances; the list goes on.
V is for Victory and W is for Woeful. Perhaps not a perfect way to compare two types of economic recoveries, but it is an easy method nonetheless.
Is Tax Relief Really The American Way?
May 4th, 2009 by Matthew C. Keegan | 2 Comments | Filed in CommentaryLook back over our nation’s history and you soon realize that taxation has always played a big role in how Americans define themselves. One of the reasons why the American colonies broke free from England was over the issue of taxation.
Tired About Taxes? Then Do Something!
These days, Americans often feel that they are being taxed to death all over again. No, the English have nothing to do with all of the anger being vented by taxpayers all across our nation. Rather, politicians in Washington, DC as well as in state capitals and even on the local level are creating much angst for tax weary citizens. Do you feel overtaxed? If you do, you can fight back which is the American way!
No, you don’t have to redo the Boston Tea Party to get the attention of elected officials. Dump something into a river today and the environmental police will jump all over you! On the other hand, you can signal loud and clear your displeasure to your politicians that “enough is enough” when it comes to taxes by taking the following steps:
Gather Signatures – Create a petition and have eligible voters sign the petition is one way that you can tell your elected officials that you demand they hold the line on taxes. In some areas of the country an online petition may be sufficient while in other areas you will have to go door to door for signatures. Expect to spend plenty of time recruiting volunteers and helpers!
Put it to Vote – In California, citizens are famous for voting on tax relief through propositions that mandate the government cap real estate taxes. If your state does not have such a method of seeking relief, you could pressure lawmakers to put forth a ballot initiative regardless. Learn what the requirements are to establish a local response.
Get out the Vote – What a sad state of affairs it is when getting half of the eligible voters out for an election is considered to be a good thing. Encourage everyone you know to vote with their feet by hitting the polling place on Election Day!
Run for Office – If you have a vision to hold taxes in line, then consider running for office yourself. Stay away from the special interest group — instead, form a true people’s voice movement to get the support that you need and the mandate necessary to help bring about real change.
Change Begins With You
Yes, tax relief can be done through the democratic process. Get involved and build a government wide tax relief model that will benefit citizens nationally. A movement starts with one person — will you be the one to get the tax relief engine started?
Adv.– Are you considering the purchase of a house or a car during this recession? For consumers who have good or excellent credit, this may be the best time to jump in to the market. You’ll also want to make sure that your emergency income levels are consistent during these times as well as have a good food storage plan in place to keep those costs under control too.
Tags: debt local government, federal government, money, state government, taxation, taxes