Word of the Day Online

The Tax Man O'Cometh

Written by WOTDO

Friday, 17 October 2008

The tax man is coming! The tax man is coming!

For those fools who actually still think that just because they make less than $250k a year that they will receive a tax cut under Obama's economic disaster plan, here is a little dose of reality. The Bush tax cuts are ending. Some have already ended, others will be in a couple of months, others in a couple of years. The Democratically-controlled Congress has already promised to allow the Bush tax cuts to expire so while you don't think that Obama is going to raise your taxes, he certainly isn't going to prevent them from going back up to where they were under the Clinton years. Remember those good times?

Here is what we ALL have to look forward to*:

Capital Gains: Rates will rise to 10 or 20 percent, depending upon income, on January 1, 2009.

Dividends: Rates will rise to match standard income tax rates on January 1, 2009.

Child Credit: This credit will shrink from $700 to $500 per child on January 1, 2011.

The Income Tax: [Editor's Note: Listen up!] Rates will increase between 3 and 4.5 percentage points in each bracket on January 1, 2011.

The 10 Percent Bracket: The bracket will be eliminated on January 1, 2011, raising the income tax burden of many workers by 5 percentage points.

The 15 Percent Bracket for Joint Filers: On January 1, 2011, the upper limit of this bracket will shrink from 200 to 167 percent of the upper limit of the 15 percent bracket for single filers, creating a marriage penalty.

Standard Deduction for Joint Filers: On January 1, 2011, this will shrink from 200 to 167 percent of the standard deduction for single filers, creating a marriage penalty.

The Estate Tax: The top rate for this tax will increase to 60 percent on January 1, 2011, and the value of an estate exempt from taxation will shrink to $1 million, which is less than it is today.

Now let's talk brass tax. Here is the reality in numbers - let's use the American Dollar:

Single taxpayers earning $30K will pay 15% more

Single taxpayers earning $50K will pay 10% more

Single taxpayers earning $75K will pay 11% more

Well now, that doesn't sound right does it? The lowest bracket in this list (those earning $30K) will actually see a higher percentage increase in their tax rate compared to those making $50K+. Huh. There's more:

Married taxpayers earning $60K will pay 19.5% more

Married taxpayers earning $75K will pay 21.5% more

Married taxpayers earning $125K will pay 20.5% more

Wow! Pull out your calculators and do the math to see how much more YOU will be paying. I don't know about you, but those few extra thousand I'll be shelling out I could use for, say, food.

Since I'm a masochist who likes to "spread the misery around" and just so you know which tax cuts have already expired and to which you are the unfortunate beneficiary of, here are those for your reference:

Child Credit: This credit will shrink from $1,000 to $700 per child on January 1, 2005.

The 10 Percent Bracket: The upper income level for this bracket will decrease by $1,000 per filer on January 1, 2005.

The 15 Percent Bracket for Joint Filers: On January 1, 2005, the upper limit of this bracket will shrink from 200 to 180 percent of the upper limit of the 15 percent bracket for single filers, creating a marriage penalty.

Standard Deduction for Joint Filers: On January 1, 2005, this will shrink from 200 to 174 percent of the standard deduction for single filers, creating a marriage penalty.

Alternative Minimum Tax: Exemptions will decrease by $6,500 per filer on January 1, 2005.

Bonus Depreciation: This provision, which changes depreciation schedules for businesses in a way that encourages investment, will expire on January 1, 2005.

Small Business Expensing: On January 1, 2006, the maximum amount that a business may deduct will fall from $100,000 to $25,000, which will not be indexed to inflation.

So, the next time you hear Barack Obama say that those making less than $250k will not see a penny more in taxes under his administration, think like Joe the Plumber. Ask him about it and call him on it. And the next time you think that the conservatives are not on YOUR side, think again. Who has ever reduced your taxes (Bush, Reagan) and who has raised them (Clinton, Carter)? Doesn't it feel great to be an American?

And that's the word of the day. - WOTDO

* Tax information as shown at www.heritage.org

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