Best of the Week
Most Popular
1.London House Prices Bubble, Debt Slavery, Crimea 2.0 - Russia Ukraine Annexation - Nadeem_Walayat
2. Gold And Silver – 2014 Coud Be A Yawner; Be Prepared For A Surprise - Michael_Noonan
3.Sheffield, Rotherham Roma Benefits Plague, Ch5 Documentary Gypsies on Benefits & Proud - Nadeem_Walayat
4.Glaring Q.E. Failure Spotted - Money Velocity Is Falling Rapidly - Jim_Willie_CB
5.Don't Miss the Boat on Big Biotech Catalysts: Keith Markey - Keith Markey
6.Gold Prices 2014: Do What Goldman Does, Not What It Says - David Zeiler
7.Bitcoin Price Strong Appreciation to Be Followed by Declines? - Mike_McAra
8.Gold Preparing to Launch as U.S. Dollar Drops to Key Support - Jason_Hamlin
9.Doctor Doom on the Fiat Money Empire Coming Financial Crisis - Andrew_McKillop
10.The Real Purpose Of QE - It’s Not Employment - Darryl_R_Schoon
Last 72 Hrs
America has Become a Police State - 19th Apr 14
Elite Herd Psychology And War By Default - 19th Apr 14
E.U. Officially Adopts the Bank Depositors Bail-In - 19th Apr 14
Goldman Sachs Is Highly Motivated To Low-Ball Gold Price - 19th Apr 14
Save MtGox - Bitcoin Important Implications of Going Down - 19th Apr 14
Stock Market SPX Topping Valuations - 19th Apr 14
Tesco Profits Panic! Back to Back £5 Off £40 Shop Voucher Promotions - 18th Apr 14
The Obama Game - Is Putin Being Lured Into a Trap? - 18th Apr 14
The Growing Threat to Capitalism - 18th Apr 14
Build Biotech Wealth on Solid Platforms - 18th Apr 14
Has Solar Power Finally Arrived? - 18th Apr 14
Bank Depositor Bail-Ins and Real Assets vs Liability-Based Assets - 18th Apr 14
10 Ways to Screw up Your Retirement - 17th Apr 14
One of Harry Dent’s Three Keys to Market Prediction is Cycles - 17th Apr 14
Obamacare Proof Stocks - 17th Apr 14
Gold, Silver And The Mining Sector: Prepare For A Severe Fall - 17th Apr 14
Hidden Australian Life Sciences Bio-tech Growth Stocks - 17th Apr 14
Disrupting Big Data Status Quo - 17th Apr 14
What the Stock Market Bears Have Been Waiting for... - 17th Apr 14
Copper Is Pathological and Suffers from SAD, but It Has Value - 17th Apr 14
Old World Order New World Order, Chaos And Change - 17th Apr 14
Even The US Government Will Abandon the U.S. Dollar - 17th Apr 14
Gold - Coming Super Bubble - 17th Apr 14
Glaring Q.E. Failure Spotted - Money Velocity Is Falling Rapidly - 16th Apr 14
High-Frequency Insider Trading - 16th Apr 14
Gold Prices 2014: Do What Goldman Does, Not What It Says - 16th Apr 14
These CEOs Will Make Investors Rich - 16th Apr 14
Climate Change, Central Banking And The Faustian Bargain - 16th Apr 14
Every Central Bank for Itself - 16th Apr 14
Social Security, U.S. Treasury Stealing Every Last Penny From Americans - 16th Apr 14
Ukraine Falling to Economic Warfare and Its Own Missteps - 16th Apr 14
Silver and Gold Miners Still Disappoint - 16th Apr 14
Silver, Gold, and What Could Go Wrong - 15th Apr 14
How I Intend to Survive the Meltdown of America - 15th Apr 14
France Wakes Up To The Multicultural Multi-Threat - 15th Apr 14
The Real Purpose Of QE - It’s Not Employment - 15th Apr 14
Peak Coal - 15th Apr 14
Flash Crash, Rigged Markets - What’s the Frequency Zenith? - 15th Apr 14
Forecasting U.S. GDP Growth: A Look at WSJ Economists’ Collective Crystal Ball - 15th Apr 14
Stock Market - Is Something Nasty About to Happen? - 15th Apr 14
How to Trade Your Way To Freedom - 15th Apr 14
Understanding (and Ignoring) the Media Bandwagon Against Gold - 15th Apr 14
When Stock Market Bubble Crashes, Take Refuge in Gold Stocks - 15th Apr 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

U.S. Taxmageddon Just Got More Frightening

Politics / Taxes Jul 03, 2012 - 05:37 AM GMT

By: Money_Morning

Politics

Best Financial Markets Analysis ArticleDiane Alter writes: Political battles will take center stage in the second half of 2012, but few loom larger than the scheduled tax increases - "Taxmageddon" - set to take effect in January 2013.

Bush-era tax cuts, payroll tax breaks and other provisions set to expire next year could pack an enormous financial hit, harming the already-fragile U.S. economy and thousands of struggling families. While Democrats and Republicans alike are opposed to letting all the cuts expire, they disagree on exactly what to do about it.


Republicans blame U.S. President Barack Obama and his administration for the stalemate.

Sen. John Cornyn, R-TX, has said Republicans want to extend all of the Bush tax cuts, including the "big-ticket" ones, and even some Democrats support reform of the entire tax code, but "the bad news is that President Obama is missing in action."

"Unless Congress and the president act, January will bring us the largest tax increases in American history-a tax increase of approximately $500 billion," Cornyn said in a weekly radio address last week.

President Obama wants to end the Bush-era tax cuts for individuals making more than $200,000 a year and couples making more than $250,000 annually. The move is aimed to garner more revenue for a government saddled with growing federal debt. The president has said that wealthier Americans are in a position to help.

But Taxmageddon will fall principally on middle and low income Americans because 60% of the Bush tax cuts went to middle- and low-income taxpayers.

Cornyn said in the Republican radio address, "Make no mistake, every single working American will see his or her taxes go up on January 1 absent action. Family budgets will be squeezed even tighter. Disposable income will shrink. And many jobs will be destroyed."

The uncertainty over federal taxes has weighed on the U.S. economy, Cornyn added.

"Raising taxes is the last thing we should do amid the weakest economic recovery since World War II," he said. "Unfortunately, even if we avoid the full "Taxmageddon" scenario, President Obama's health care law also contains a new surtax on investment that will take effect in 2013. This new surtax will hamper small business investment, which is the lifeblood of private sector job creation."

Obamacare and Taxmageddon
The Supreme Court ruling last Thursday upheld Obamacare. The Court ruled that the key individual mandate requiring Americans to have health coverage or be forced to pay a fine is constitutional under the federal government's taxing power.

People will be required to buy health insurance coverage or pay a penalty (tax) if they don't.

Republicans and opponents call the ruling the largest tax increase in U.S. history.

According to Forbes, the average U.S. family income is approximately $50,000. With family healthcare coverage running upwards of $2,000 annually and swiftly increasing, the coverage mandate is in essence a 4% tax on that family, which will be required to make sure every family member has coverage.

Because the cost of coverage will be uniform across all income levels, Forbes notes, the lower the income, the higher the effective tax rate. Obamacare is essentially the most regressive tax in U.S. history, too.

And it'll be in addition to the myriad other taxes imposed by the legislation.

The Full Scope of Taxmageddon
The Heritage Foundation, a research and educational think tank, has said the wave of tax hikes to take effect on Jan. 1 will hit every household, regardless of income. The 15 million American families with an average income of $70,662 can expect an annual tax increase of $4,138.

The 33.1 million Baby Boomers (average income $95,099) will see a $4,223 tax increase. Low income workers, some 53.8 million with an average income of $24,757, will get hit with a $1,027 tax increase. Millennials, the twenty- and thirty-somethings with an average income of $23,917, will get a $1,099 increase, and 33.1 million retirees will experience an $857 increase.

And this is just in the first year. In succeeding years, taxpayers will see even higher hikes.

Business are already preparing for higher taxes by holding off on hiring, as reflected in recent jobs numbers.

Meanwhile, businesses, families and investors are at a standstill, stalling on making important moves and decisions until they know how much they will need to shell out in taxes.

GOP presidential hopeful Mitt Romney has vowed to repeal Obamacare if elected. So taxpayers may have the ultimate say in Taxmageddon when they cast their votes in November.

Source :http://moneymorning.com/2012/07/02/taxmageddon-just-got-more-frightening/

Money Morning/The Money Map Report

©2012 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2014 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Free Report - Financial Markets 2014