An Epic Victory!

I'm Sure Glad We Won an Epic Victory Higher Taxes And Epic Tax Fight Are On The Horizon

“ Payroll Pain Come Jan. 1, 2012 American workers will see less in their paychecks as a temporary two-percentage-point cut in the Social Security tax expires. That’s a $2,136 tax hike for someone earning $106,800, the maximum subject to the tax. (For a family with two average incomes the tax increase comes to $1,500 a year.) Obama had pushed for this as a short-term stimulus and would like to see it extended, but this is one tax cut Republicans are ready to let die. The AMT Patch, Etc. Five dozen other tax breaks expire at the end of 2011, including a “patch” that keeps more than 20 million middle-class families from having to pay the alternative minimum tax. Congress could well delay acting on these so-called “extenders” until after the 2012 election—so it won’t have to figure out how to pay for them. After all, the 2010 patch wasn’t signed into law until Dec. 17, 2010, causing taxpayers much uncertainty about how much in estimated taxes to pay. Obama Health Surtaxes Coming on Jan. 1, 2013: “Medicare surtaxes” on income above $250,000 per couple that were adopted to help fund Obama’s 2010 health coverage expansion. One is a 3.8% extra levy on investment income (including capital gains, interest and dividends) and the other a 0.9% surtax on salaries above $250,000 per couple.  Republicans would love to repeal these tax hikes, along with the rest of what they call Obamacare. But as long as Obama remains in the White House, that won’t happen. The Big Expiration The big 2001 and 2003 Bush tax cuts won a two-year extension in the Obama-Republican deal of December 2010 and are now set to expire at the end of 2012. Also expiring: a two year cut in the estate tax as well as  tax cuts that were originally part of the 2009 stimulus, including Obama’s prized $2,500 American Opportunity college tax credit.  If these tax provisions expire, the top tax rate on ordinary income such as salary will go from 35% to 39.6% (or 40.5%, when the Medicare surtax is included) and the top rate on long term capital gains will go from 15% to 20% (or 23.8%, when the surtax is included).  Meanwhile, the current $5 million exemption from estate and gift tax would drop to $1 million, and the 35% tax rate would rise to 55%. [FORBES cont] ”