The Bush tax cuts will expire on January 1. The Obamacare taxes will hit, unless the Supreme Court declares the law unconstitutional. The average Joe has no idea of what’s in store for him.
The liberal Washington Post calls this taxmageddon. I like the phrase. It has a sense of reality about it.
Here are highlights of which taxes will rise.
- The 2001 and 2003 Bush “tax cuts” expire
- Taxes on investment income
- Estate and gift taxes
- Income taxes
- Marriage penalty returns
- Child credit drops
- Taxes on first $8700 of wages increase by 50 percent
- Payroll taxes go from 4.2 percent back to 6.2 percent
The Heritage Foundation did an analysis of all the tax increases scheduled for 2013. The report adds these:
- The Alternative Minimum Tax (AMT)
- Five new Obamacare taxes
- About 50 “tax extenders” will go away
- Small business owners can no longer write off business equipment purchases immediately
The total is $500 billion for 2013. But wait! There’s more! This becomes permanent. It will be $500 billion a year for the next decade . . . if Congress does not add any new taxes.
Now what? Will Congress hold the line in an election year? Or will Congerss and Obama work out an extension of the Bush cuts? If they do, the deficit will stay above $1 trillion a year. That is far more acceptable politically.
Obama has vowed to veto any extension of the Bush tax cuts unless the top 2% of taxpayers are forced to pay a higher rate.
If there is a last-minute deal before November, it will create havoc for the IRS. The IRS commissioner has described it as a “real disaster in the filing season where there’s total confusion.” Somehow, I do not care.
If Congress kicks the can in 2012, the lame duck session will have to deal with it. In either case, Obama will be President until January 30.
This is America’s future: no spending cuts, lots of spending hikes, with tax hikes, deficit hikes, or both paying for this. This is Keynesianism. The economists approve. The voters don’t care. Yet. It isn’t hurting most of them. Yet.
Meanwhile, unemployment stays high.