...think about this. UB
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.
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.
Itemized deductions and personal exemptions will again phase out, which has the same mathematical effect as higher marginal tax rates.
The"marriage penalty" (narrower tax brackets for married couples) will return from 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 creditswill be cut.
The return of the Death Tax.
This year only, 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 familyowns 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?
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 39.6percent in 2011.
These rates will rise another 3.8 percent in 2013.
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.
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.
When Americans prepare to file their tax returns in January of 2011,they'll be in for a nasty surprise-the AMT won't be held harmless, and many tax relief provisions will have expired.
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 was created 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.
This will be cut all the way down to $25,000. Larger businesses can currentlyexpense half of their purchases of equipment.
In January of 2011,all of it will have to be "depreciated."
There are literally scores of tax hikes on business that will takeplace. The biggest is the loss of the "research and experimentation tax credit," but there are 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 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.