With the exception of a few tax tips, the hope for lower taxes is all but gone after we lose a lot of Federal tax deductions and we go over the economic cliff into Taxmageddon
Orem, UT (PRWEB) May 14, 2012
Obama taxes that are already law will hit Americans January 1st, 2013, and they will by all accounts be the largest tax increase in history. ”With the exception of a few tax tips, the hope for lower taxes is all but gone as we lose a lot of Federal tax deductions and go over the economic cliff into Taxmageddon,” said attorney Lee Phillips at LegaLees Corporation which specializes in helping high end tax payers.
May 1st at the Milken conference in Los Angeles, Charles Evans of the Chicago Fed referred to the cliff as a “big uncertainty.” At the same time, Atlanta Fed President Dennis Lockhart said the markets could experience “financial shock” if Congress and the White House remain in deadlock over how best to jumpstart the economy.
The witching hour comes on January 1st when the Bush tax cuts expire, the payroll tax increases, ObamaCare taxes kick in, and the tax increased passed by Congress in order to get the debt ceiling raised last winter will be implemented.
Just the expiration of the tax breaks scheduled to end will cause a $500 billion tax increase. These increases will hit the average American household with an average tax increase of $3,800.
Phillips points out that the $3,800 is only from the expiration of the Bush-era tax cuts and payroll tax reductions. If you add in the direct and indirect tax increases and increased insurance costs of ObamaCare, plus the other taxes scheduled to be implemented, the average household will be looking at over $6,000 in income lost to Obama taxes and policies.
CNBC reports, “The expected tax increases and spending cuts were triggered when a congressional ‘super committee’ failed to come up with a way of closing the federal budget deficit.”
Phillips interprets all of the tax increases as being a “huge blow” to our already fragile economy.
Here are just a few of the tax changes that will hit American families:
- The child tax credit will be cut in half, from $1,000 a child to $500.
- Married couples will see the “marriage penalty” come back.
- Dividend tax rates will jump from 10 percent to 15% on the low end and rise to 39.6. This will hurt people in retirement living on dividends.
- Anyone working will see their payroll tax withholdings increase.
The alternative minimum tax will be paid by a lot more “middle income Americans.” The alternative minimum tax was supposed to tax the rich, but it will now affect more than 34 million taxpayers next year. People, making as little as $60,000 a year, could be facing alternative minimum tax payments. That’s hardly the top one percent, Phillips points out.
"Almost the entire tax code has been put on a year-to-year lease, and in some cases, month-to-month lease, which is no way to run a tax system," Scott Hodge of the Tax Foundation said.
The expiring cuts would hit all income groups but those at low and middle incomes the hardest.
"Taxmageddon is going to hurt the middle income class and even the lower income families, Phillips says. Seventy percent of the increased Obama taxes will be paid by middle and low income families. Sixty percent of the Bush-era tax cuts directly cut the taxes of middle and lower income Americans. Those will be gone January 1st.
“In order to survive small business folks, investors, and all middle income Americans will have to use all the tax tips in the book to fight the Obama taxes that are coming,” says Phillips.