Well I hope you have been nice instead of naughty this year because the holidays are just around the corner. Actually what is unique this year is that it really doesn’t matter if you have been mean, a Saint, or even if you are Christian, Jewish, or any religion at all. In fact, it matters not if you’re lucky, stinking rich, or odor-free and make less than $250,000 per year, because “YES, there is a ‘Tax Santa’ coming to town, Virginia and he doesn’t discriminate!”
By the time you are putting out the torn up wrapping gift packaging on the curb this year, and getting your favorite New Year’s kazoos tuned up, ‘Tax Santa’ is going to make your 2011 extra special indeed. According to television commentator and the ‘American’s for Tax Reform’ spokesman, Ryan Ellis, there will be three waves of added tax burden heading everyone’s way. The first pointy part of this tax trident is the much ballyhooed ‘Bush tax cuts’ which will expire on January 1, 2011. Regardless of your politics, this simply means your personal income tax rates will rise to just under 40% for the highest bracket and unbelievable 50% increase for folks going from the old 10% rate to the 2011 lowest bracket of 15%.
I don’t wish any of you ill will, but if you have to die, like Scrooge says ‘you had better get on with it’ because there currently is no death tax, but in 2011 it will be 55% of your estate if you have over a million bucks worth of stuff. I know a cool million seems like a lot of net worth but consider this. If you have worked your whole life for a nice paid-for home, maybe a vacation place, and of course a handsome 401K to live out your life, you probably will fall into this bracket. What is MOST frustrating is that by doing EVERYTHING RIGHT, and by saving and sacrificing extra spending cash today in order to be self-dependent tomorrow, the government feels it is entitled to better than half your estate. Did somebody forget that on almost all of that cash, dividends, and those worldly possessions that you own, you have paid sales taxes, annual property and Federal taxes, insurance, and maintenance out of your pocket ALREADY?
Speaking of all that stuff too, you have been so good this year, you deserve even MORE from ‘Tax Santa’s’ big bag of tricks. Dividend income taxes will increase over 160% to around 40% of their value, the child credit will be cut in half, capital gains taxes will rise by 25% and the ’marriage penalty’ will return. The second part of this Grinchy trifecta of taxation will of course be the Healthcare bill passed last year. From the 10% tanning tax in July to higher excise taxes on ‘branded’ drugs, everything (except our spirit) is ‘looking up’. Taxes on employer health care plans that are ‘too good’ or ‘not good enough’ will affect nearly EVERYONE with higher costs and taxation - NOT just the advertised evil profiteer and small business making over $250 thousand big ones. There are over 20 new tax hikes alone and 20 thousand pages of added regulations, just associated with this healthcare bill. In 2010, you worked 231 days or 63% of the year, just to pay for your government’s burdens. That is over a MONTH longer than just a couple of years ago and no doubt AT LEAST a couple of weeks less than the taxes required in 2011.
The final point of the wicked tax trident will be a 700% increase in families forced into paying the Alternative Minimum Tax (AMT), as well as loads of new tax hike goodies and slashed expensing for businesses. AMT was originally enacted in 1969 to force the top 155 income earners of the day to calculate and pay a higher tax rate since their ‘normal’ deductions were so massive that the effectively paid no tax under the regular tax system. In 2011, due to inflation, over 28 million taxpayers will have to calculate their taxes under both the regular system and alternative tax code, then pay whichever is the higher amount. Small Business will only be able to ‘Expense’ equipment and tools to $25,000 instead of the previous figure 10 times that amount. Larger business will only be allowed to ‘Depreciate’ tools rather than expense half of them as before, which results in what? – yep, less new machinery purchased which means LESS jobs.
Sorry to ruin your holidays so early and with such a downer. It’s just time that regular VOTING people wake-up and understand that we are literally eating ourselves alive here. The government oddly continues to de-incentivize investment in business, R&D, job growth, all the while spending money and adding taxation at an un-sustainable rate. These tax hikes take away deductions from teachers and ordinary households who rely on tuition deductions for kids in schools and college. No more classroom deductions or Cloverdale education account tax breaks. Even charities are hurt since IRA charitable deductions will be disallowed, so what was once a donation anticipated by a wealthy donor will simply shift to yet another tax payment. There are only 100 pennies in every dollar. When you take away, even a fraction of a cent for some perceived public need, that is a fraction LESS of personal wealth that you individually control. At some point you run out of pennies and … uh well, - Christmas is officially over. Sadly then, all we’ll be able to say is “NO Virginia, there is no Santa Claus – he lost his way and was TAXED TO DEATH.”