On January 1, 2011, the largest tax hikes in the history of America will take effect and drive us deep into a depression. You think unemployment of 9.6% is high? Just wait 6 months. It will be higher, much higher.
These taxes will affect EVERYONE, families, farmers, seniors, small businesses, and big businesses, so don't let the political cronies in Washington try to tell you that they will affect "only the rich." That is an outright LIE, and they know it.
FIRST TAX TSUNAMI: Expiration of the 2001/2003 Tax Relief Act (referred to as the Bush Tax Cuts). In those years the GOP controlled Congress enacted many tax cuts for investors, small businesses and families. They will all expire on January 1. This is what it means to you, middle income average Americans already struggling to support your families, and to you, seniors living on a fixed income.
PERSONAL INCOME TAX RATES WILL RISE. It's the truth. Don't listen to the denials coming out of the mouths of the propagandists in Washington. The top rate increases from 35% to 39.6%. The lowest rate increases from 10% to 15%. All rates in between will also increase as indicated in this chart.
10% rises to 15%
25% rises to 28%
28% rises to 31%
33% rises to 36%
35% rises to 39.6%
No matter where you currently fall in this rate structure, your taxes are going UP, families, seniors, small and large businesses, everyone.
Itemized deductions and personal exemptions will phase out, which has the same effect as higher tax rates. You lower exemptions and deductions? You pay more taxes, simple enough math even for the Washington idiots who are going to allow this to happen. Oh, I almost forgot, many of the people currently running the Washington machine are "tax cheats." They don't care that we will pay more so they can cheat and pay less.
The "Marriage Penalty" will return from the first dollar of income, meaning married couples will pay higher tax on the same income as a single person does. Sure seems fair, doesn't it?
The Standard Deduction will no longer be doubled for married couples relative to the single person deduction.
The Child Tax Credit of $1000 will return to the pre-2001/2003 rate of $500. Pay attention, anyone who has children. The reduction in this credit will cost you dearly, $500 less for each child you have. Sure hope you didn't have your 2010 payroll withholding figured based on getting $1000 credit for each child. If so, you may be in for a big surprise when you prepare your 2010 return. It could mean the difference between you getting a refund at the end of the year, or owing Uncle Sam money at the end of the year.
The Dependent Care and Adoption Tax Credits will be cut drastically.
And another Big One, the return of the Death Tax.
Under the 2001/2003 Tax Relief Act the Death Tax was phased out. But it's coming back Big Time. Starting 1/1 the rate goes to 55% on estates over $1 million. If you have two homes, a retirement account, a business, business real estate, a farm, investment properties, rentals, stocks, bonds, savings, any combination of these could easily put you over $1 million. After 1/1/2011 your heirs may have to sell your assets, the farm, the business, etc., just to pay the Death Tax. Even if the farm or business is their livelihood, too bad, Uncle Sam is going to want up to 55% of its value over $1 million upon your death.
Here is an easy calculation. Let's say your estate is worth $1.5 million. The half million over the $1 million is subject to 55% tax. You will owe $275,000 in cash to the government, 55% of the value of the assets over $1 million. That will be your estate tax. Can you just "write a check" to cover this. Not likely. Assets would have to be sold quickly at fire sale prices just to cover the tax. This is why the Death Tax Phase Out was included in the 2001/2003 Tax Relief Act in the first place. It is patently unfair to tax someone literally To Death after they have paid taxes on all they have while they were alive. So if you are going to DIE, do it NOW before January 1.
And the last part of the FIRST TAX TSUNAMI?
Capital Gains Tax will rise from 15% to 20%. (Don't dare sell anything that creates a Capital Gain or it will cost you)
Dividend Tax will rise from 15% to 39.6% in 2011 and rise again to 43.4 in 2013. (Don't receive any dividends from stocks, bonds, etc. or it will cost you over double) This is especially onerous to seniors who are living on the dividends from investments. This will affect millions of Baby Boomers about to retire.
And let me add that this is just the FIRST TAX TSUNAMI coming at us on 1/1/2011. I will bring you more information in later blogs on the subject of additional taxes we are facing in 2011.
This government is the robber, the rapist and the killer of our entire economic system. That is, unless we stop them in November.
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