Backdoor taxes to hit middle class

[Parkbandit]

NEW YORK (Reuters.com) --The Obama administration's plan to cut more than $1 trillion from the deficit over the next decade relies heavily on so-called backdoor tax increases that will result in a bigger tax bill for middle-class families.

In the 2010 budget tabled by President Barack Obama on Monday, the White House wants to let billions of dollars in tax breaks expire by the end of the year -- effectively a tax hike by stealth.

While the administration is focusing its proposal on eliminating tax breaks for individuals who earn $250,000 a year or more, middle-class families will face a slew of these backdoor increases.

The targeted tax provisions were enacted under the Bush administration's Economic Growth and Tax Relief Reconciliation Act of 2001. Among other things, the law lowered individual tax rates, slashed taxes on capital gains and dividends, and steadily scaled back the estate tax to zero in 2010.

If the provisions are allowed to expire on December 31, the top-tier personal income tax rate will rise to 39.6 percent from 35 percent. But lower-income families will pay more as well: the 25 percent tax bracket will revert back to 28 percent; the 28 percent bracket will increase to 31 percent; and the 33 percent bracket will increase to 36 percent. The special 10 percent bracket is eliminated.

Investors will pay more on their earnings next year as well, with the tax on dividends jumping to 39.6 percent from 15 percent and the capital-gains tax increasing to 20 percent from 15 percent. The estate tax is eliminated this year, but it will return in 2011 -- though there has been talk about reinstating the death tax sooner.

Millions of middle-class households already may be facing higher taxes in 2010 because Congress has failed to extend tax breaks that expired on January 1, most notably a "patch" that limited the impact of the alternative minimum tax. The AMT, initially designed to prevent the very rich from avoiding income taxes, was never indexed for inflation. Now the tax is affecting millions of middle-income households, but lawmakers have been reluctant to repeal it because it has become a key source of revenue.

Without annual legislation to renew the patch this year, the AMT could affect an estimated 25 million taxpayers with incomes as low as $33,750 (or $45,000 for joint filers). Even if the patch is extended to last year's levels, the tax will hit American families that can hardly be considered wealthy -- the AMT exemption for 2009 was $46,700 for singles and $70,950 for married couples filing jointly.

Middle-class families also will find fewer tax breaks available to them in 2010 if other popular tax provisions are allowed to expire. Among them:

* Taxpayers who itemize will lose the option to deduct state sales-tax payments instead of state and local income taxes;

* The $250 teacher tax credit for classroom supplies;

* The tax deduction for up to $4,000 of college tuition and expenses;

* Individuals who don't itemize will no longer be able to increase their standard deduction by up to $1,000 for property taxes paid;

* The first $2,400 of unemployment benefits are taxable, in 2009 that amount was tax-free.

http://news.yahoo.com/s/nm/20100201/bs_nm/us_budget_backdoortaxes

In Obama's defense, sure he said 95% of Americans will get a "tax cut".. but he never said that after that "tax cut" he wouldn't just raise their taxes the next year. If I were the St. Petersburg Times that tracks Obama's campaign promises.. I would say this is a "Promise Kept"!!

[Kuyuk]

NEW YORK (Reuters.com) --The Obama administration's plan to cut more than $1 trillion from the deficit over the next decade relies heavily on so-called backdoor tax increases that will result in a bigger tax bill for middle-class families.

In the 2010 budget tabled by President Barack Obama on Monday, the White House wants to let billions of dollars in tax breaks expire by the end of the year -- effectively a tax hike by stealth.

While the administration is focusing its proposal on eliminating tax breaks for individuals who earn $250,000 a year or more, middle-class families will face a slew of these backdoor increases.

The targeted tax provisions were enacted under the Bush administration's Economic Growth and Tax Relief Reconciliation Act of 2001. Among other things, the law lowered individual tax rates, slashed taxes on capital gains and dividends, and steadily scaled back the estate tax to zero in 2010.

If the provisions are allowed to expire on December 31, the top-tier personal income tax rate will rise to 39.6 percent from 35 percent. But lower-income families will pay more as well: the 25 percent tax bracket will revert back to 28 percent; the 28 percent bracket will increase to 31 percent; and the 33 percent bracket will increase to 36 percent. The special 10 percent bracket is eliminated.

Investors will pay more on their earnings next year as well, with the tax on dividends jumping to 39.6 percent from 15 percent and the capital-gains tax increasing to 20 percent from 15 percent. The estate tax is eliminated this year, but it will return in 2011 -- though there has been talk about reinstating the death tax sooner.

Millions of middle-class households already may be facing higher taxes in 2010 because Congress has failed to extend tax breaks that expired on January 1, most notably a "patch" that limited the impact of the alternative minimum tax. The AMT, initially designed to prevent the very rich from avoiding income taxes, was never indexed for inflation. Now the tax is affecting millions of middle-income households, but lawmakers have been reluctant to repeal it because it has become a key source of revenue.

Without annual legislation to renew the patch this year, the AMT could affect an estimated 25 million taxpayers with incomes as low as $33,750 (or $45,000 for joint filers). Even if the patch is extended to last year's levels, the tax will hit American families that can hardly be considered wealthy -- the AMT exemption for 2009 was $46,700 for singles and $70,950 for married couples filing jointly.

Middle-class families also will find fewer tax breaks available to them in 2010 if other popular tax provisions are allowed to expire. Among them:

* Taxpayers who itemize will lose the option to deduct state sales-tax payments instead of state and local income taxes;

* The $250 teacher tax credit for classroom supplies;

* The tax deduction for up to $4,000 of college tuition and expenses;

* Individuals who don't itemize will no longer be able to increase their standard deduction by up to $1,000 for property taxes paid;

* The first $2,400 of unemployment benefits are taxable, in 2009 that amount was tax-free.

http://news.yahoo.com/s/nm/20100201/bs_nm/us_budget_backdoortaxes

In Obama's defense, sure he said 95% of Americans will get a "tax cut".. but he never said that after that "tax cut" he wouldn't just raise their taxes the next year. If I were the St. Petersburg Times that tracks Obama's campaign promises.. I would say this is a "Promise Kept"!!


I just bolded my thoughts on the matter.

Can you provide proof that he will not be resigning/renewing this in the next 11 months?

[Clove]

Considering the American Recovery and Reinvestment Act of 2009 allows for a tax credit of up to 2,500 for tuition and expenses, I won't mourn the loss of a 4,000 deduction.

[Keller]

I just bolded my thoughts on the matter.

Can you provide proof that he will not be resigning/renewing this in the next 11 months?

The article states that the expiration of the Bush tax cuts is part of Obama's budget proposal.

[Keller]

Considering the American Recovery and Reinvestment Act of 2009 allows for a tax credit of up to 2,500 for tuition and expenses, I won't mourn the loss of a 4,000 deduction.

But 4,000 is greater than 2,500, noob.

[Parkbandit]

I just bolded my thoughts on the matter.

Can you provide proof that he will not be resigning/renewing this in the next 11 months?

You realize that the "proof" that you require is in the same article you conveniently skipped over, right? This is the budget that Obama has presented.. and in it he has called for the expiration of the taxes. Now, whether or not that makes the final version is anyone's guess.. but the proof is in the budget submission.

Unless, you want to say he overlooked them.. or didn't know.. or somehow you want to blame Bush for putting them in special secret code that Obama didn't have the decoder ring for.

[Keller]

Taxpayers who itemize will lose the option to deduct state sales-tax payments instead of state and local income taxes;

Suck one, Texas.

[Keller]

You realize that the "proof" that you require is in the same article you conveniently skipped over, right? This is the budget that Obama has presented.. and in it he has called for the expiration of the taxes. Now, whether or not that makes the final version is anyone's guess.. but the proof is in the budget submission.

Unless, you want to say he overlooked them.. or didn't know.. or somehow you want to blame Bush for putting them in special secret code that Obama didn't have the decoder ring for.

You are such a snarky little bitch.

[Parkbandit]

You are such a snarky little bitch.

Takes one to know one, Queer.


But 4,000 is greater than 2,500, noob.

[Keller]

Takes one to know one, Queer.

And you seriously wonder why people think you're homophobic?

[Kithus]

Here's your answer. Reuters was, unsurprisingly, wrong. The "Making Work Pay" tax credit will also be extended.



A February 1 Reuters article - subsequently withdrawn by the wire service -- claimed that the Obama administration's budget plan includes "backdoor tax increases that will result in a bigger tax bill for middle-class families," citing increases to marginal federal income tax rates that would go into effect if the Bush tax cuts were allowed to expire, and an increase in middle class families that would be subject to the Alternative Minimum Tax (AMT) without the renewal of a patch to limit its impact. In fact, Obama's 2011 budget calls for the Bush tax cuts to be extended for individuals making $200,000 or less and couples making $250,000 and for the AMT patch to be extended at its 2009 parameters through 2020.


http://mediamatters.org/research/201002020028

[Kranar]

Reuters is posting a retraction to the article.

The article was pulled from Reuters for being factually inaccurate.

[Nieninque]

BUGGER> THIS WAS A TEN PAGE THREAD AT LEAST...BASTARDS!

[Mighty Nikkisaurus]

It's too late. Once it is on the internet, it is true.

[Keller]

It's too late. Once Rocktar thinks it is true, it is true.

Fixed.

[Latrinsorm]

Don't worry, there is a natural progression from this to "if the middle class doesn't pay, than the upper class has to, why does President Obama want to punish success???"

[ClydeR]

If the provisions are allowed to expire on December 31, the top-tier personal income tax rate will rise to 39.6 percent from 35 percent. But lower-income families will pay more as well: the 25 percent tax bracket will revert back to 28 percent; the 28 percent bracket will increase to 31 percent; and the 33 percent bracket will increase to 36 percent. The special 10 percent bracket is eliminated.

Investors will pay more on their earnings next year as well, with the tax on dividends jumping to 39.6 percent from 15 percent and the capital-gains tax increasing to 20 percent from 15 percent. The estate tax is eliminated this year, but it will return in 2011 -- though there has been talk about reinstating the death tax sooner.

Fortunately, Clyde knows how to look things up on the internets.


The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) split the 15-percent statutory individual income tax rate bracket of prior law into two tax rate brackets of 10 and 15 percent, and replaced the four remaining statutory individual income tax rate brackets of 28, 31, 36 and 39.6 percent with statutory tax rate brackets of 25, 28, 33 and 35 percent. When the tax rate brackets provided under EGTRRA expire on December 31, 2010, the Administration proposes to extend the tax rate brackets of 10, 15, 25 and 28 percent; to eliminate the tax rate brackets of 33 and 35 percent; and to reinstate the prior law tax rate brackets of 36 and 39.6 percent. These rate increases would apply to married taxpayers filing a joint return with income over $250,000 (at 2009 levels) and to single taxpayers with income over $200,000. The 28-percent tax rate bracket would be expanded so that taxpayers earning less than these amounts would not see their taxes rise as a result of the increased tax rate brackets.

More... (http://www.whitehouse.gov/omb/budget/fy2011/assets/receipts.pdf)


Under the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA), the maximum tax rate on long-term capital gains was reduced from 20 percent to 15 percent for taxpayers in individual income tax rate brackets exceeding 15 percent, and from 10 percent to 5 percent (zero beginning in 2008) for lower-income taxpayers. JGTRRA also reduced the maximum tax rate on qualified dividends received by an individual shareholder to 15 percent for taxpayers in individual income tax rate brackets above 15 percent and to 5 percent (zero beginning in 2008) for lower-income taxpayers. Dividends had been taxed as ordinary income under prior law. The Administration proposes to increase the tax rate on qualified dividends and long-term capital gains to 20 percent for married taxpayers filing a joint return with income over $250,000 (at 2009 levels) and for single taxpayers with income over $200,000. The proposal would be effective for taxable years beginning after December 31, 2010. All other taxpayers would be taxed at the rates in effect in 2009.

If you read all that, you've got to be asking yourself what it all means. Well it means that the Democrats are out to punish the success of the most productive members of society! Productive people have been hit hard over the last few years. Everybody's retirement plan values -- at least for those productive enough to have retirement savings plans -- may have fallen, but the bigger your retirement savings, the more it fell. On top of all that, Obama wants productive people, who after all have been sorely taxed for years and years, to go back to the tax rates they bore during the awful, awful decade of the 1990s. Does anybody here really want to go back to the 90s when we had so many terrible problems, like the President cheating on his wife?