In less than six months, a huge wave of new taxes will begin to hit our shores, a veritable financial tsunami that will impact everyone regardless of social position, economic standing, age, race or gender. On January 1 tax cuts for investors, small business owners and families will have ended while personal income tax rates will rise.
Shared Pain
And it won’t only be people who are in the top tax bracket who will get hit: everyone will pay more including people in the lowest tax bracket. This means that if the government is taking 10 percent of wages, your new obligation will be 15 percent: a 50 percent increase. The 25 percent bracket, the next highest taxing level will increase to 28 percent; with people who are now paying 28 percent rising to 31 percent and 33 percent rising to 36 percent.
Estate taxes which disappeared in 2010 will be returning with a vengeance in 2011. If a loved one dies, expect to pay a whopping 55 percent tax on estates although the first one million dollars is excluded. For example, if your estate is worth two million dollars, then the federal tax alone is $550,000. Yes, that means the money you rightfully earned over the course of your lifetime could be frittered away due to fed taxation.
Special Savings
Health savings accounts have benefited millions of Americans who have used pre-tax dollars to pay for pricey, non-prescription over-the-counter medicines and medical devices such as hearing aids.
According to the American Dental Association, over-the-counter drugs not prescribed by a physician (such as Claritin) will no longer be covered. In addition, funds you take out of your HSA account that are not used for medical costs will be taxed at a 20 percent rate instead of the current 10 percent rate.
Small Businesses
Most of us are employed by or own a small business, entities which did not enjoy the special help the federal government has given to Chrysler, General Motors, most large banks and other financial institutions over the past few years. If the economy didn’t impact your business, then the coming changes in the tax code certainly will.
Tanning salon operators were among the first group of small business owners who were slapped with a special “tanning tax” of ten percent beginning on July 1. Those fees are expected to raise $2.7 billion over the next ten years to help fund the federal health care reform bill.
Business Advocates
The National Federation of Independent Business, an advocacy group for small business owners, has been following closely the healthcare law and what impact it will have on companies. The tanning tax is the first wave of what will be at least 25 new tax fees and mandates directed at small business operators.
“Right now small businesses need to concentrate on making payroll and encouraging customers to come through their doors,” said Bill Rys, tax counsel, NFIB. “New taxes like this amount to a 10 percent increase in the cost of doing business, and that money has to come from somewhere. Higher taxes mean less investment, reduced growth and fewer customers – hardly the prescription for future job growth our country needs.”
The NFIB says that tax paperwork is a significant burden for small businesses, averaging more than $74 per hour in compliance costs. In the case of the tanning tax, that must be reported and paid quarterly, and business owners are responsible for tracking, filing and collecting payment from customers.
Adv. — Are you heading off to college this fall? OffToCollege.com has the tools you need to get prepared now. Check out our free downloads, useful to help you keep everything in order.
end of post idea for home improvement
view and analyze home improvement ideas at our LetsRenovate center
Helpful article? Leave us a quick comment below.
And please give this article a rating and/or share it within your social networks.