Obama’s Tax Increases In The 2011 Budget
Obama’s budget projects an $8.5 trillion deficit over 2011-20, and that’s after the $1.4 trillion in tax increases. Higher taxes will be part of a major overhaul designed to simplify the tax code. The legislation will have cuts as well as hikes, putting everything in a catchall piece of legislation. The debt is simply unsustainable over the long-term tax increases will hit both businesses and individuals, not just singles making more than $200,000 a year and married couples over $250,000 a year. Higher taxes on businesses, upper-income taxpayers, and fossil fuels; an increased death tax; and new taxes to pay for health care would destroy jobs and slow economic recovery. Obama wants to unwind the so-called Bush tax cuts for individuals in the top two tax rate brackets starting next year. The current 33% and 35% tax rates would jump to 36% and 39.6% and affect married joint-filing couples with incomes above $250,000 and unmarried individuals with incomes above $200,000. Tax increase on businesses would be the higher on businesses operating internationally. The budget would restrict their ability to deduct interest expenses associated with foreign income until recognized in the U.S. Obama’s budget would also make it more difficult for businesses operating internationally to claim a credit for taxes paid in foreign countries. Changing these provisions will increase taxes on U.S. businesses that operate overseas and, in doing so, hurt job creation at home. The U.S. is the only country in the world that taxes the overseas income of its businesses. All other countries tax only income earned within their borders.
These rate hikes are projected to raise about $365 billion over 2011-20.
By Sept. 30, 2010, when the 2010 fiscal year blessedly ends, the federal debt is projected to be $9.3 trillion. That amounts to $30,000 for every man, woman and child in the U.S. (based on a population of around 310 million).
By Sept. 30, 2020, the debt is expected to double to $18.6 trillion. Even accounting for population growth (the U.S. Census Bureau projects our population will be 325 million by then), that works out to about $57,000 for every man, woman and child.
If you have a family of four, your little household’s share of the 2010 debt is $120,000. By 2020, Obama wants to bump that up to at least $228,000. Many households don’t pay any federal income taxes at all and same pay only a little.
Boosts in top marginal rates from 33% and 35% to 36% and 39.6%.
Caps on itemized deductions for top earners. Limiting the value of deductions at 28% ran into a wall of opposition from charitable groups.
No repeal of estate taxes, better known as the “death tax,” expired on January 1. This was the result of a decade-long policy that reduced the tax and finally repealed it for 2010. If Congress continues the tax, it would be a tax increase, and the budget should explicitly count it as such. Estate tax legislation will include spousal transfers, making the exemption $7 million or more for couples. The estate tax rate will be capped at 45%, the same as it is now.
Health Care Taxes creates an allowance for revenue raised due to health care reform. The taxes included in the separate House and Senate bills–and a variety of other taxes proposed but not included in either bill–are the best guide available to which taxes could do the job. Since a final bill is not complete, it is not possible to know what specific taxes would pay for health care reform if it passes Congress.
More easings for the alternative minimum tax, but no repeal.
Higher Energy taxes on oil, gas, and coal companies by repealing several tax credits available to these businesses. These energy companies would undoubtedly pass these tax increases on to customers in the form of higher prices.
Higher SECA taxes for owners of S firms and partnerships by blocking them in the future from skirting payroll taxes by taking their compensation as dividends instead of salary.
New restrictions on worker classification to make it easier for the IRS to crack down on firms that treat workers as contractors who are really employees.
Elimination of some tax breaks for big corporations, including the deduction for domestic production, accelerated depreciation and incentives for foreign income and oil production.
Obama’s budget proposes $989 billion in new taxes over the course of the next 10 years, starting fiscal year 2011, most of which are tax increases on individuals.
Individuals making more than $250,000:
$338 billion – Bush tax cuts expire
$179 billion – eliminate itemized deduction
$118 billion – capital gains tax hike
Total: $636 billion/10 years.
$17 billion – Reinstate Superfund taxes
$24 billion – tax carried-interest as income
$5 billion – codify “economic substance doctrine”
$61 billion – repeal LIFO
$210 billion – international enforcement, reform deferral, other tax reform
$4 billion – information reporting for rental payments
$5.3 billion – excise tax on Gulf of Mexico oil and gas
$3.4 billion – repeal expensing of tangible drilling costs
$62 million – repeal deduction for tertiary injectants
$49 million – repeal passive loss exception for working interests in oil and natural gas properties
$13 billion – repeal manufacturing tax deduction for oil and natural gas companies
$1 billion – increase to 7 years geological and geophysical amortization period for independent producers
$882 million – eliminate advanced earned income tax credit
Total: $353 billion/10 years
This would be a $17,000 tax increase for every American household during that span. This figure does not include possible revenue from the cap-and-trade legislation currently before congress. The higher taxes on businesses include the recently proposed “bank tax” that is supposed to recapture the money lent to big banks as part of the TARP program. Obama also wants to restore two phase-out rules that can wipe out part or all of a higher-income individual’s personal exemption deductions and up to 80% of the most common types of itemized deductions, including write-offs for home mortgage interest, state and local income and property taxes, and charitable donations. There’s not enough revenue that can be drawn from the wealthy without crippling the economy. In time, middle incomers will be targeted. Anyone making more than $100,000 a year will be at risk for higher taxes. Longer term, tax hikes will go even further and hit more people and businesses. The only other option is deep cuts in spending, including Social Security, Medicare and defense. Lumping together income, excise, payroll and other taxes, the average rate paid today is 21¢ on every dollar of income, according to a recent Congressional Budget Office analysis of data from 2006, the most recent data available.
Follow Me On Twitter
Click On Links:
2011 Budget Summary
2011 Budget Terminations, Reductions And Savings
Obama Seeks $1.1 Trillion In Tax Hikes
The House Negro And The Field Negro
Obama Said Electricity Rates Would Necessarily Skyrocket
Hillary Clinton Warned America About Obama
H.R. 3962 Summary
2010 Budget Plan Terminations And Reductions
Obama Call For Spending Freezes
Summary Of The Defense Appropriation Bill
Obama Signs $1.1 Trillion Spending Bill
Earmarks In The $1.1T Federal Spending Bill
Obama Facing Debt Payments, $1.6 TRILLION Due By March
Millions To Repay Part Of Obama Tax Credit
Black People Don’t Like Black Conservatives