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Taxmageddon Will Hit on January 1, 2013

Written by Gary North on April 12, 2012

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.

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39 thoughts on “Taxmageddon Will Hit on January 1, 2013

  1. No way the Bush tax cuts don't get extended. Yes, Congress is generally stupid, but failing to extend the cuts would be immediate economic suicide (as opposed to the gradual/slow motion suicide they are currently choosing).

    • The big problem remains the deficit, and the lack of national self esteem to pay down debt. Leadership should set goals and incentives that are honorable. I suggest suspending all government worker bonuses and pension payments until such time there is enough tax revenue to pay for them. Government woprkers can muddle through on Social Security for awhile, just like everybody else.

      Congress can ask for a citizen referendum vote to increase taxes so that government worker bonuses and pensions can be resumed. If the people of the country reject such a tax increase, then so be it.

    • If Congress was smart they would leave the bush tax cuts alone if not our Business owners will be cutting back on employees, that is one reason we still have several business's in American that are not bankrupt.
      How one person Obama can put the US in such a Mess and start such havoc, way is he getting away with all the things he has done, there has to be more than we are being told, the Republicans seating back and doing nothing when if it was the other way around the Republican President would be in front of so many committees he would be in one every day, what gives?

    • Aren't you putting the cart before the horse? You're ASSUMING we won't be under Marxist rule by then and business as usual will still exist. In reality, we could be living in a much different world where none of our concerns or laws will be the same as they are now.

  2. I prefer the OBAMA TAX INCREASES. They are all on the books, Obama signed them and they will go into effect unless action is taken. Obama agreed to all of them!

  3. A repeat of the Fall of the Roman Empire is in Site for the USA. We are headed down the wrong path Those with common sense should see that.

  4. BullKrapper says:

    Looks as if the Obamas have even more vacations planned. — VOTE FOR AMERICA & TURN NOVEMBER INTO NO-BAMA —- Stay Well/Stay Safe/Stay Free

  5. The big problem remains the deficit, and the lack of national self esteem to pay down debt. Leadership should set goals and incentives that are honorable. I suggest suspending all government worker bonuses and pension payments until such time there is enough tax revenue to pay for them. Government woprkers can muddle through on Social Security for awhile, just like everybody else.

    Congress can ask for a citizen referendum vote to increase taxes so that government worker bonuses and pensions can be resumed. If the people of the country reject such a tax increase, then so be it.

    • Are We experiencing the ordeals of the 'Anti Christ" ? As it is written ? He certainly is no Christian!

    • Think about what you are proposing. I have a modest govt pension which I paid into for over 30 years. I get $200 a month in social security, which is not enough to pay for my medicare and supplemental insurance. How do you propose I survive on that?

      • JulesV29 says:

        I'm afraid I'm going to have call Bullsh*t on that one, Jack. If you worked for 30 years and paid into a govt pension–you were making pretty darn good money and should be receiving more than $200 a month.

        • You're wrong, Jules, read Jack's note carefully. Jack gets a govt pension plus a pittance from SocSec. The law prevents double dipping. If he loses his pension, then at least give him full SocSec benifits.

      • You worked for over 30 years and put NOTHING away for retirement? That's the downside to Social Security. People think it's a pension meant to support them in their old age. it was never designed as that (though it's often billed as that!). It was only meant to offset costs, so the elderly wouldn't be a burden on their families. No one was ever meant to live off of it exclusively.

        • When you pay into a retirement system while working for the government, you are putting away something for retirement. I paid for almost thirty years and accumulated $215,000. I am getting that money now in the form of monthly checks. That will last until 2021. In theory the city of Los Angeles is supposed to pay me after that date. Unfortunately, I doubt the city will up to the task and so I have to come up with a income by then. I earned my pension by working in power plants and wastewater treatment plants, not some office and I could have gotten killed in an accident everyday I worked. I doubt I shall ever collect social security and if I did it would be reduced because of my pension. Don't get mad at the government workers because the democrats sold you a bill of goods with social security.

  6. First, of all, Paul (in the Holy Bible) said, that there where many anti-christs. That has happen through time for more than 2,000 years! However, what America is having to deal with is an illegal in the White House. We have had No leadership in the White House. We have had No president in the White House, we have only a communist, marxist, half white muzlim, illegal making up illegals laws to follow. Which are not really laws at all, since he is Anti-American, and no body is doing anything about this.
    Well, when it gets bad enough, then somebody will go something about it!

    • Dear Dr. X,
      It IS bad enough – and he and his czars are still there.

    • It is urgent that you read, sign, copy & forward. NEED 3-5% OF THE POPULATION http://www.givemeliberty.org/

      This site is dedicated to restoring constitutional governance
      carried out in decency and good order

      2012 is the Year We The People Take Back Our Power Over Our Servant Government by Claiming and Exercising our Right, — a Fundamental Right — to Petition the Government for Redress of Grievances, a Right Guaranteed by the First Amendment and every State Constitution.

      These are professionally drafted, legal Petitions worthy of our Constitution and our People. The Petitions address significant violations of our Constitutions which threaten our Liberty.

      Stand Up and Be Heard!

  7. A. B. From Berheley says:

    The only solution is to monetize (ignore) the debt. Any attempt to run surpluses and pay it down will collapse our economy. Gold is meaningless. All economic theories are wrong. Growth comes ultimately from the energy received from the sun and what we can extract from the ground.

    • Dear AB,
      Did you learn all that from the university at Berkley ?

      • JulesV29 says:

        No, amagi, I can imagine where he "extracted" that answer from. Gold was extracted from the ground, how did it become worthless? Oil is extracted from the ground, why aren't we making use of what we have…oil & natural gas?

    • ccfonten says:

      What a delusional, pitiful fool

  8. In that group of Taxmageddon above, I see a "War on Business", "War on the Middle Class", and "War on Family"… to put it in their own terms. And all the while Obama claims to support Business, the Middle Class, and Family. Says one thing, does another… That's Obama. Unless he's off the teleprompter, in which case, sometimes he slips up and actually says what he's thinking…

  9. It will be post election season, Obama will be super flexable and it will be time to put the nail in the coffin of the economy. People get ready, it only gets worse from here.

  10. icetrout says:

    Americans deserve what’s going down for voting the communist into power…

  11. Big mess our country is in from big money suppling big self centered greed for money and power. What has happened to our countries' government employees do they not understand that they are distroying the longest lasting republic the world has ever seen? There is no excuse for the lack of respect our federal government is showing toward the constitution of america.

  12. Gillisgrocery says:

    Why do people always state "extend the Bush tax cuts" instead of Democrats raising taxes. There are other problems in Obamas health care bill. Like the 3% excise tax on sale of real estate,the provision to upgrade to current standards to sell said properry. Some homes will have to be completely rewired and plumbed. Add new appliances and windows,insulation any gain will be completely wiped out. Especially when you consider how much property values have declined.

  13. What an amazing fertile field for Obama to politic in!!! He can bribe over half the population by stopping all these tax increases. Of course, once he's re-elected, he can reverse it all. Because, after all, we are not yet Europe, his ideal.

  14. Blair Franconia, NH says:

    Keep the Bush tax cuts.

  15. Friend of Taxes says:

    I cannot wait to see what happens.

  16. [...] MORE:  http://teapartyeconomist.com/2012/04/12/taxmageddon-will-hit-on-january-1-2013/ Categories : [...]

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