SIX MONTHS TO GO UNTIL THE LARGEST TAX HIKES IN HISTORY
July 2, 2010
In just six months, the largest tax hikes in the history of America will take effect. They will hit families and small businesses January 1, 2011, says Americans For Tax Reform.
The first wave will be the expiration of 2001 and 2003 Tax Relief. In 2001 and 2003, the GOP Congress enacted several tax cuts for investors, small business owners, and families. These will all expire on January 1, 2011:
- Personal income tax rates will rise; the top income tax rate will rise from 35 to 39.6 percent (this is also the rate at which two-thirds of small business profits are taxed).
- The lowest rate will rise from 10 to 15 percent; all the rates in between will also rise.
- Itemized deductions and personal exemptions will again phase out, which has the same mathematical effect as higher marginal tax rates.
The return of the Death Tax:
- This year, there is no death tax.
- For those dying on or after January 1 2011, there is a 55 percent top death tax rate on estates over $1 million.
- A person leaving behind two homes and a retirement account could easily pass along a death tax bill to their loved ones.
Higher tax rates on savers and investors:
- The capital gains tax will rise from 15 percent this year to 20 percent in 2011.
- The dividends tax will rise from 15 percent this year to 39.6 percent in 2011.
- These rates will rise another 3.8 percent in 2013.
Some of the other taxes the Obama administration has planned:
- There are over 20 new or higher taxes in ObamaCare; several will first go into effect on January 1, 2011.
- When Americans prepare to file their tax returns in January of 2011, they'll be in for a nasty surprise -- the Alternative Minimum Tax (AMT) won't be held harmless, and many tax relief provisions will have expired.
Source: Ryan Ellis, "Six Months to Go Until The Largest Tax Hikes in History," Americans for Tax Reform, July 1, 2010.
Browse more articles on Tax and Spending Issues