Thursday, November 18, 2010

What Will Happen When the Bush Tax Cuts Expire?

According to Gary Wickert a tsunami, actually three of them, will sweep over the economy one after the other and they won't just affect "the rich":

First Wave

Bush Tax Cuts Expire. Congress didn’t even have the strength of character to stay and vote on extending the Bush tax cuts before running home to protect their professional political careers. These tax cuts all expire on January 1, 2011. Thereafter, the top income tax rate will rise from 35% to 39.6%, the same rate at which two-thirds of small business profits are taxed. The lowest rate will rise from 10% to 15%. All the rates in between will also rise. Somewhere I seem to recall a promise about tax cuts for 95% of “working families.”

Second Wave

Obamacare will be the focus of congressional wrangling over the next two years, but it is unlikely to be repealed in that time. There are over 20 huge and completely new taxes contained within the new health care law which was hurried through Congress without being read and passed against the will of the American people. Several will first go into effect on January 1, 2011.

Third Wave

The Alternative Minimum Tax and Employer Tax Hikes. The AMT, which was originally intended simply to make sure that wealthy taxpayers didn’t use tax shelters and other tactics to avoid having to pay any taxes at all (a good start for an argument for a flat tax), affected nearly 4 million families last year. Starting in 2011, it will affect over 28 million families.

There's much more. Read the whole thing.
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