The Largest Tax Hike Email Debunked, Part 1
The Viral "01/01/11 The Largest Tax Hikes In The History Of America Will Take Effect" Email Is Complete Fiction.This is going to be a bit long, but it needs to be in order to accurately address and debunk the claims circulating in millions of email forwards. This is the newest attempt in the run up to the midterm elections in November to gin up fear and create hysteria at the polls. Nothing dispels ignorance like information, and nothing upends a lie like the truth. Pass this on by linking it to as many people as you like so that people can get accurate information and make informed decisions based on actuality instead of fear mongering. Thank you.
For starters, it doesn't really count as a the "largest tax hike in history" if it only affects a tiny fraction of the population, and restores rates to what they were previously (rather than actually raising them). The 'death tax' according to this misonformation would pass a tax bill to the loved ones/recipients of willed assets. That is NOT how the 'death tax' works. The tax is charged to the estate, not the heirs (much like the gift tax, which is essentially the same tax with a lower exemption, is paid by the giver, not the recipient). The executor of the estate is the person responsible for making sure that it gets paid from the assets of the estate. Often that person is a loved one, but that's not mandatory and it's not like the IRS is sending out a "death tax bill" to everyone who experiences a death in their family. If a close relative with a taxable estate dies, you don't suddenly personally owe the IRS money. In any case, the amount owed in tax is always going to be less than the value of the estate, so it's impossible to come out owing as "pass along a death tax bill" implies. Not that I expected anything referring to the "death tax" to be particularly honest. At least this didn't refer to it as the "Obama Tax Hike" like I've started to see, even though he was still in the Illinois legislature when the law causing it was passed.
The assertion that people will have to pay taxes on their employer provided health insurance is wrong unless in 2018 it is deemed to be a Cadillac plan. Employers will however have to include health insurance in W2s beginning 2011 but again employees will not pay taxes. Going from 35% to 39.6% is not a larger tax hike than when it went from 15% to 67% in 1917. Or from 25% to 63% in 1932. Or from 31% to 39.6% in 1993. Some conservative political movements such as the "Tea Party" have criticized federal spending as being out of control. While spending is up, taxes have fallen to exceptionally low levels. In fact, tax bills in 2009 are at the lowest level since 1950. As the non-partisan Tax Policy Center (TPC) noted Wednesday: "[N]ext year about 36 million taxpayers will report income" using the returns most small businesses use to report income, but "Only about 900,000, or 2.5 percent, would pay higher rates if the Bush tax cuts were allowed to expire for those in the top brackets."
The TPC went on to note that while that 2.5 percent did very well, earning "almost 44 percent of all the business income included in individual returns," the "average positive business income reported on 1040s is less than $40,000," a far cry from the $200,000 it would take for the business income to be taxed at higher rates under Obama's plan. Three percent, it should be noted, is much less than 50 percent, and does not qualify as "most." That's not to say that some people reporting business income wouldn't face higher taxes, it's just that those people are very wealthy, and are not necessarily engaged in the sorts of careers most of us think of as "small businesses".
Via Media Matters:
Viral Email: TAX HIKES COMING JAN. 1
August 30, 2010 4:52 pm ET
The following email has been widely forwarded. Media Matters Action Network has written a response to the text below. Please feel free to copy and paste it and send to your friends.
"TAX HIKES COMING JAN. 1"
[note - all mistakes below are original to the text]
From: XXXXXX@gmail.com
To: XXXXX@yahoo.com
Sent: August 24, 2010 9:37 PM<
Subject: TAX HIKES COMING JAN. 1
In just six months, the largest tax hikes in the history of America will take effect.
ICA can help our clients find ways to shelter investment income from these increases.
Offer your clients a no obligation consultation with ICA to review their portfolio and prepare them for these increases.
Here is a brief overview of the income tax increases coming up:
They will hit families and small businesses in three great waves on January 1, 2011:
First Wave:
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 full list of marginal rate hikes is below:
- The 10% bracket rises to an expanded 15%
- The 25% bracket rises to 28%
- The 28% bracket rises to 31%
- The 33% bracket rises to 36%
- The 35% bracket rises to 39.6%
Higher taxes on marriage and family.
The "marriage penalty" (narrower tax brackets for married couples) will return from the first dollar of income. The child tax credit will be cut in half from $1000 to $500 per child. The standard deduction will no longer be doubled for married couples relative to the single level. The dependent care and adoption tax credits will be cut.
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.
Second Wave:
Obamacare
There are over twenty new or higher taxes in Obamacare. Several will first go into effect on January 1, 2011. They include:
The "Medicine Cabinet Tax"
Thanks to Obamacare, Americans will no longer be able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin).
The "Special Needs Kids Tax"
This provision of Obamacare imposes a cap on flexible spending accounts (FSAs) of $2500 (Currently, there is no federal government limit). There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children. There are thousands of families with special needs children in the United States, and many of them use FSAs to pay for special needs education. Tuition rates at one leading school that teaches special needs children in Washington , D.C. ( National Child Research Center ) can easily exceed $14,000 per year. Under tax rules, FSA dollars can not be used to pay for this type of special needs education.
The HSA Withdrawal Tax Hike.
This provision of Obamacare increases the additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent.
Third Wave:
The Alternative Minimum Tax and Employer Tax Hikes
When Americans prepare to file their tax returns in January of 2011, they'll be in for a nasty surprise-the AMT won't be held harmless, and many tax relief provisions will have expired.
The major items include:
The AMT will ensnare over 28 million families, up from 4 million last year.
According to the left-leaning Tax Policy Center, Congress' failure to index the AMT will lead to an explosion of AMT taxpaying families-rising from 4 million last year to 28.5 million. These families will have to calculate their tax burdens twice, and pay taxes at the higher level. The AMT was created in 1969 to ensnare a handful of taxpayers.
Small business expensing will be slashed and 50% expensing will disappear.
Small businesses can normally expense (rather than slowly-deduct, or "depreciate") equipment purchases up to $250,000. This will be cut all the way down to $25,000. Larger businesses can expense half of all of it will have to be "depreciated."
Taxes will be raised on all types of businesses.
There are literally scores of tax hikes on business that will take place. The biggest is the loss of the "research and experimentation tax credit," but there are many, many others. Combining high marginal tax rates with the loss of this tax relief will cost jobs.
Tax Benefits for Education and Teaching Reduced.
The deduction for tuition and fees will not be available. Tax credits for education will be limited. Teachers will no longer be able to deduct classroom expenses. Coverdell Education Savings Accounts will be cut. Employer-provided educational assistance is curtailed. The student loan interest deduction will be disallowed for hundreds of thousands of families.
Charitable Contributions from IRAs no longer allowed.
Under current law, a retired person with an IRA can contribute up to $100,000 per year directly to a charity from their IRA. This contribution also counts toward an annual "required minimum distribution." This ability will no longer be there.
PDF Version Read more: http://www.atr.org/six-months-untilbr-largest-tax-hikes-a5171##ixzz0sY8waPq1
Now your insurance is INCOME on your W2's......
One of the surprises we'll find come next year, is what follows - - a little "surprise" that 99% of us had no idea was included in the "new and improved" healthcare legislation . . . the dupes, er, dopes, who backed this administration will be astonished!
Starting in 2011, (next year folks), your W-2 tax form sent by your employer will be increased to show the value of whatever health insurance you are given by the company. It does not matter if that's a private concern or governmental body of some sort. If you're retired? So what; your gross will go up by the amount of insurance you get.
You will be required to pay taxes on a large sum of money that you have never seen. Take your tax form you just finished and see what $15,000 or $20,000 additional gross does to your tax debt. That's what you'll pay next year. For many, it also puts you into a new higher bracket so it's even worse.
This is how the government is going to buy insurance for the15% that don't have insurance and it's only part of the tax increases. Not believing this??? Here is a research of the summaries...
On page 25 of 29: TITLE IX REVENUE PROVISIONS- SUBTITLE A: REVENUE OFFSET PROVISIONS-(sec. 9001, as modified by sec. 10901) Sec.9002 "requires employersto include in the W-2 form of each employee the aggregate cost of applicable employer sponsored group health coverage that is excludable from the employees gross income."
RESPONSE
Hey,
Thanks for forwarding this email. It would definitely be scary if Congress was planning on raising everybody's taxes at the end of the year, especially while the economy is struggling to recover. But luckily, that's not going to happen. Many of the claims in this email are misleading or outright lies.
You might remember that Sarah Palin recently said something similar about how Democrats wanted to have "the largest tax increase in U.S. history." Well, a website called PolitiFact.com that looks into claims from both Democrats and Republicans said that it's a blatant lie. In fact, they rated Palin's statement "Pants on Fire" - the worst rating somebody can get. You can read it here: http://www.politifact.com/truth-o-meter/article/2010/aug/04/distorting-democratic-plans-bush-tax-cuts/
The details of all of this are a little complicated, but it's important to understand how we got to the point where this is even a debate. Basically, Republicans passed huge tax cuts early in the Bush administration to try to stimulate the economy. At the time, the only way they could get enough votes in Congress to pass the tax cuts was to use a procedure called reconciliation (you might remember it from the health care debate) and write the law so that it would expire in 10 years. Read more about that here: http://www.time.com/time/magazine/article/0,9171,128937-1,00.html
So now the 10 years is up and Congress has to figure out what to do. I know it might seem obvious that they shouldn't let taxes go up at all, but here's the thing: the tax cuts cost A LOT of money (way more than Obama's stimulus) and they didn't lead to any significant economic growth. I know we all worry about the size of the federal deficit, but most people don't realize that the Bush tax cuts are one of the biggest causes of the deficit problem. Look: http://www.offthechartsblog.org/whose-deficit-is-it-anyway/
Still, most people can't afford to pay higher taxes right now and President Obama and Congress recognize that. That's why they're planning to pass a bill continuing the tax cuts for almost everybody, but letting them expire for the richest Americans. We're talking about households that make more than $250,000 per year, not middle class families. And the changes will only affect 1.9% of small business owners:
http://www.politifact.com/truth-o-meter/statements/2010/jul/22/mike-pence/mike-pence-says-democrats-want-all-bush-tax-cuts-e/
http://www.cbpp.org/files/8-29-08tax.pdf
In fact, the only way the huge tax hikes in the email will occur is if Republicans do what they've been doing since Obama took office and try to block the bill when it comes up for a vote. Because if Congress doesn't pass anything at all, then everyone's taxes will go up - but that's not what anyone has in mind.
This is already getting pretty long, so I'm not going to get into every little detail in the email. I think the fact that the main point was so dishonest should tell you all you need to know. If there's a specific claim that's bothering you, I encourage you to do a little research of your own - this infographic summarizing President Obama's proposals for the expiring tax cuts is a good place to start: http://graphics8.nytimes.com/images/2010/07/25/us/politics/25tax-graphic/25tax-graphic-popup.jpg.
Please, be careful about forwarding emails like this in the future without getting all the facts. Otherwise, people might get all worked up for no reason.
Hope to talk to you soon!
-Media Matters Action Network
Via TPMDC:
GOPers Revise History: Say Dems Have Tax Hike Ticking Time 'Bomb'
Christina Bellantoni | August 19, 2010, 8:56AM
Somewhere between approving a massive tax cut plan with an expiration date and President Obama's election, Republicans seem to have decided that it's Obama's fault the tax cuts aren't permanent.
Karl Rove's Crossroads GPS this week detailed the "seven public policy initiatives" that will be most important for Congress next year. The group runs ads against Democrats across the country.
On the list at No. 1: "Stop the Obama tax hike time bomb scheduled to detonate on January 1, 2011."
That's not a typo. Rove's group is claiming that Obama set the timer on that so-called "bomb."
And in this slick video produced by the House GOP for the summer recess, Rep. Kevin Brady (R-TX) uses the "bomb" term as well. He says there is a "ticking tax bomb that can explode on our economy and families at the end of this year."
Watch:
http://www.youtube.com/watch?v=ayzwoioUS8k
There's a debate about whether it's fair to say that an expiring tax cut amounts to a tax increase. TheWashington Post is out with this nifty calculator to help you see if your taxes would go up next year under Obama's plan, which extends the cuts for families earning $250,000 or less. A work packet for House Republicans obtained by TPM actually spells out the situation almost accurately: "Washington Democrats are poised to allow the largest tax increase in American history to take effect next year."
The word "allow" is key -- the whole point is that they were written this way.
It's true that Obama has repeatedly insisted he'll let them expire and rebuffed suggestions from tax-cut-friendly Democrats such as Sen. Max Baucus to extend them during this tough economic time. But is it really fair to call it a time bomb set by the president? Hardly.
Let's roll tape.
It's May 26, 2001, and the Senate, with just 12 Democrats on board, passes the Bush tax cuts. The House approves the tax cuts too, and 28 Democrats vote "yes." They cost $1.35 trillion and were set to expire to comply with Congressional rules, triggered by the GOP's use of reconciliation, that required they either expire within 10 years or not increase the deficit. So, the "tax increase" was written that way -- by Republicans.
June 7, 2001. President Bush signs the tax cuts, seemingly unaware of the ticking time bomb within. He declared:
A year ago tax relief was said to be a political impossibility. Six months ago it was supposed to be a political liability. Today it becomes reality. It becomes reality because of the bipartisan leadership of the Members of the United States Congress, Members like Bill Thomas of California, Ralph Hall of Texas, Charles Grassley of Iowa, Max Baucus of Montana, Zell Miller of Georgia, John Breaux of Louisiana, Trent Lott of Mississippi and the entire leadership team in the Senate, and Denny Hastert of Illinois and the leadership team in the House of Representatives--some Democrats, many Republicans--who worked tirelessly and effectively to produce this important result.
In 2003, the Republican-controlled Congress approved another tax cut measure, which accelerated some of the benefits they'd put in place the year before. That also was set to expire.
Fast forward to Bush's 2008 State of the Union address, when he urged Democrats controlling Congress to make his tax cuts permanent:
Unless Congress acts, most of the tax relief we've delivered over the past seven years will be taken away. Some in Washington argue that letting tax relief expire is not a tax increase. Try explaining that to 116 million American taxpayers who would see their taxes rise by an average of $1,800.
This is going to be a major topic of debate this fall before the midterm elections. Of the 12 Democratic senators who backed the tax cuts nine years ago, 7 are still serving. Baucus already has made his preference known. The others? Sens. Blanche Lincoln (AR), Ben Nelson (NE), Dianne Feinstein (CA), Tim Johnson (SD), Herb Kohl (WI) and Mary Landrieu (LA). (Sen. Arlen Specter, then a Republican, also voted for the tax cuts.)
Bill Clinton managed to pass "the largest tax hike in history" (as it was characterized at the time) around 1993. How did the economy do after that? It boomed. George Bush passed a bunch of tax cuts after being elected. How did the economy do after that? The boom ended and there was just so-so growth. Eventually, it collapsed. The idea that tax policy affects the economy seems to have no actual real-world proof. Other factors are far more important (e.g., the collapse of the banks had little to do with tax policy).
Slate.com recently juxtaposed current footage of Republicans claiming that tax cuts don't have to be paid for with budget cuts, because they "pay for themselves," against GHW Bush's "voodoo economics" accusation against Reagan early in the 1980 campaign. They posted a graph that shows how the budget deficit has varied under Democratic and Republican presidents since 1970 (guess who's deficits are a LOT bigger?). For those of you who plan to vote in November, and you absolutely should, I would strongly urge you to consider this data when choosing candidates to support. It's pretty compelling.
- Click HERE for part 2 of this post -
For starters, it doesn't really count as a the "largest tax hike in history" if it only affects a tiny fraction of the population, and restores rates to what they were previously (rather than actually raising them). The 'death tax' according to this misonformation would pass a tax bill to the loved ones/recipients of willed assets. That is NOT how the 'death tax' works. The tax is charged to the estate, not the heirs (much like the gift tax, which is essentially the same tax with a lower exemption, is paid by the giver, not the recipient). The executor of the estate is the person responsible for making sure that it gets paid from the assets of the estate. Often that person is a loved one, but that's not mandatory and it's not like the IRS is sending out a "death tax bill" to everyone who experiences a death in their family. If a close relative with a taxable estate dies, you don't suddenly personally owe the IRS money. In any case, the amount owed in tax is always going to be less than the value of the estate, so it's impossible to come out owing as "pass along a death tax bill" implies. Not that I expected anything referring to the "death tax" to be particularly honest. At least this didn't refer to it as the "Obama Tax Hike" like I've started to see, even though he was still in the Illinois legislature when the law causing it was passed.
The assertion that people will have to pay taxes on their employer provided health insurance is wrong unless in 2018 it is deemed to be a Cadillac plan. Employers will however have to include health insurance in W2s beginning 2011 but again employees will not pay taxes. Going from 35% to 39.6% is not a larger tax hike than when it went from 15% to 67% in 1917. Or from 25% to 63% in 1932. Or from 31% to 39.6% in 1993. Some conservative political movements such as the "Tea Party" have criticized federal spending as being out of control. While spending is up, taxes have fallen to exceptionally low levels. In fact, tax bills in 2009 are at the lowest level since 1950. As the non-partisan Tax Policy Center (TPC) noted Wednesday: "[N]ext year about 36 million taxpayers will report income" using the returns most small businesses use to report income, but "Only about 900,000, or 2.5 percent, would pay higher rates if the Bush tax cuts were allowed to expire for those in the top brackets."
The TPC went on to note that while that 2.5 percent did very well, earning "almost 44 percent of all the business income included in individual returns," the "average positive business income reported on 1040s is less than $40,000," a far cry from the $200,000 it would take for the business income to be taxed at higher rates under Obama's plan. Three percent, it should be noted, is much less than 50 percent, and does not qualify as "most." That's not to say that some people reporting business income wouldn't face higher taxes, it's just that those people are very wealthy, and are not necessarily engaged in the sorts of careers most of us think of as "small businesses".
Via Media Matters:
Viral Email: TAX HIKES COMING JAN. 1
August 30, 2010 4:52 pm ET
The following email has been widely forwarded. Media Matters Action Network has written a response to the text below. Please feel free to copy and paste it and send to your friends.
"TAX HIKES COMING JAN. 1"
[note - all mistakes below are original to the text]
From: XXXXXX@gmail.com
To: XXXXX@yahoo.com
Sent: August 24, 2010 9:37 PM<
Subject: TAX HIKES COMING JAN. 1
In just six months, the largest tax hikes in the history of America will take effect.
ICA can help our clients find ways to shelter investment income from these increases.
Offer your clients a no obligation consultation with ICA to review their portfolio and prepare them for these increases.
Here is a brief overview of the income tax increases coming up:
They will hit families and small businesses in three great waves on January 1, 2011:
First Wave:
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 full list of marginal rate hikes is below:
- The 10% bracket rises to an expanded 15%
- The 25% bracket rises to 28%
- The 28% bracket rises to 31%
- The 33% bracket rises to 36%
- The 35% bracket rises to 39.6%
Higher taxes on marriage and family.
The "marriage penalty" (narrower tax brackets for married couples) will return from the first dollar of income. The child tax credit will be cut in half from $1000 to $500 per child. The standard deduction will no longer be doubled for married couples relative to the single level. The dependent care and adoption tax credits will be cut.
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.
Second Wave:
Obamacare
There are over twenty new or higher taxes in Obamacare. Several will first go into effect on January 1, 2011. They include:
The "Medicine Cabinet Tax"
Thanks to Obamacare, Americans will no longer be able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin).
The "Special Needs Kids Tax"
This provision of Obamacare imposes a cap on flexible spending accounts (FSAs) of $2500 (Currently, there is no federal government limit). There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children. There are thousands of families with special needs children in the United States, and many of them use FSAs to pay for special needs education. Tuition rates at one leading school that teaches special needs children in Washington , D.C. ( National Child Research Center ) can easily exceed $14,000 per year. Under tax rules, FSA dollars can not be used to pay for this type of special needs education.
The HSA Withdrawal Tax Hike.
This provision of Obamacare increases the additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent.
Third Wave:
The Alternative Minimum Tax and Employer Tax Hikes
When Americans prepare to file their tax returns in January of 2011, they'll be in for a nasty surprise-the AMT won't be held harmless, and many tax relief provisions will have expired.
The major items include:
The AMT will ensnare over 28 million families, up from 4 million last year.
According to the left-leaning Tax Policy Center, Congress' failure to index the AMT will lead to an explosion of AMT taxpaying families-rising from 4 million last year to 28.5 million. These families will have to calculate their tax burdens twice, and pay taxes at the higher level. The AMT was created in 1969 to ensnare a handful of taxpayers.
Small business expensing will be slashed and 50% expensing will disappear.
Small businesses can normally expense (rather than slowly-deduct, or "depreciate") equipment purchases up to $250,000. This will be cut all the way down to $25,000. Larger businesses can expense half of all of it will have to be "depreciated."
Taxes will be raised on all types of businesses.
There are literally scores of tax hikes on business that will take place. The biggest is the loss of the "research and experimentation tax credit," but there are many, many others. Combining high marginal tax rates with the loss of this tax relief will cost jobs.
Tax Benefits for Education and Teaching Reduced.
The deduction for tuition and fees will not be available. Tax credits for education will be limited. Teachers will no longer be able to deduct classroom expenses. Coverdell Education Savings Accounts will be cut. Employer-provided educational assistance is curtailed. The student loan interest deduction will be disallowed for hundreds of thousands of families.
Charitable Contributions from IRAs no longer allowed.
Under current law, a retired person with an IRA can contribute up to $100,000 per year directly to a charity from their IRA. This contribution also counts toward an annual "required minimum distribution." This ability will no longer be there.
PDF Version Read more: http://www.atr.org/six-months-untilbr-largest-tax-hikes-a5171##ixzz0sY8waPq1
Now your insurance is INCOME on your W2's......
One of the surprises we'll find come next year, is what follows - - a little "surprise" that 99% of us had no idea was included in the "new and improved" healthcare legislation . . . the dupes, er, dopes, who backed this administration will be astonished!
Starting in 2011, (next year folks), your W-2 tax form sent by your employer will be increased to show the value of whatever health insurance you are given by the company. It does not matter if that's a private concern or governmental body of some sort. If you're retired? So what; your gross will go up by the amount of insurance you get.
You will be required to pay taxes on a large sum of money that you have never seen. Take your tax form you just finished and see what $15,000 or $20,000 additional gross does to your tax debt. That's what you'll pay next year. For many, it also puts you into a new higher bracket so it's even worse.
This is how the government is going to buy insurance for the15% that don't have insurance and it's only part of the tax increases. Not believing this??? Here is a research of the summaries...
On page 25 of 29: TITLE IX REVENUE PROVISIONS- SUBTITLE A: REVENUE OFFSET PROVISIONS-(sec. 9001, as modified by sec. 10901) Sec.9002 "requires employersto include in the W-2 form of each employee the aggregate cost of applicable employer sponsored group health coverage that is excludable from the employees gross income."
RESPONSE
Hey,
Thanks for forwarding this email. It would definitely be scary if Congress was planning on raising everybody's taxes at the end of the year, especially while the economy is struggling to recover. But luckily, that's not going to happen. Many of the claims in this email are misleading or outright lies.
You might remember that Sarah Palin recently said something similar about how Democrats wanted to have "the largest tax increase in U.S. history." Well, a website called PolitiFact.com that looks into claims from both Democrats and Republicans said that it's a blatant lie. In fact, they rated Palin's statement "Pants on Fire" - the worst rating somebody can get. You can read it here: http://www.politifact.com/truth-o-meter/article/2010/aug/04/distorting-democratic-plans-bush-tax-cuts/
The details of all of this are a little complicated, but it's important to understand how we got to the point where this is even a debate. Basically, Republicans passed huge tax cuts early in the Bush administration to try to stimulate the economy. At the time, the only way they could get enough votes in Congress to pass the tax cuts was to use a procedure called reconciliation (you might remember it from the health care debate) and write the law so that it would expire in 10 years. Read more about that here: http://www.time.com/time/magazine/article/0,9171,128937-1,00.html
So now the 10 years is up and Congress has to figure out what to do. I know it might seem obvious that they shouldn't let taxes go up at all, but here's the thing: the tax cuts cost A LOT of money (way more than Obama's stimulus) and they didn't lead to any significant economic growth. I know we all worry about the size of the federal deficit, but most people don't realize that the Bush tax cuts are one of the biggest causes of the deficit problem. Look: http://www.offthechartsblog.org/whose-deficit-is-it-anyway/
Still, most people can't afford to pay higher taxes right now and President Obama and Congress recognize that. That's why they're planning to pass a bill continuing the tax cuts for almost everybody, but letting them expire for the richest Americans. We're talking about households that make more than $250,000 per year, not middle class families. And the changes will only affect 1.9% of small business owners:
http://www.politifact.com/truth-o-meter/statements/2010/jul/22/mike-pence/mike-pence-says-democrats-want-all-bush-tax-cuts-e/
http://www.cbpp.org/files/8-29-08tax.pdf
In fact, the only way the huge tax hikes in the email will occur is if Republicans do what they've been doing since Obama took office and try to block the bill when it comes up for a vote. Because if Congress doesn't pass anything at all, then everyone's taxes will go up - but that's not what anyone has in mind.
This is already getting pretty long, so I'm not going to get into every little detail in the email. I think the fact that the main point was so dishonest should tell you all you need to know. If there's a specific claim that's bothering you, I encourage you to do a little research of your own - this infographic summarizing President Obama's proposals for the expiring tax cuts is a good place to start: http://graphics8.nytimes.com/images/2010/07/25/us/politics/25tax-graphic/25tax-graphic-popup.jpg.
Please, be careful about forwarding emails like this in the future without getting all the facts. Otherwise, people might get all worked up for no reason.
Hope to talk to you soon!
-Media Matters Action Network
Via TPMDC:
GOPers Revise History: Say Dems Have Tax Hike Ticking Time 'Bomb'
Christina Bellantoni | August 19, 2010, 8:56AM
Somewhere between approving a massive tax cut plan with an expiration date and President Obama's election, Republicans seem to have decided that it's Obama's fault the tax cuts aren't permanent.
Karl Rove's Crossroads GPS this week detailed the "seven public policy initiatives" that will be most important for Congress next year. The group runs ads against Democrats across the country.
On the list at No. 1: "Stop the Obama tax hike time bomb scheduled to detonate on January 1, 2011."
That's not a typo. Rove's group is claiming that Obama set the timer on that so-called "bomb."
And in this slick video produced by the House GOP for the summer recess, Rep. Kevin Brady (R-TX) uses the "bomb" term as well. He says there is a "ticking tax bomb that can explode on our economy and families at the end of this year."
Watch:
http://www.youtube.com/watch?v=ayzwoioUS8k
There's a debate about whether it's fair to say that an expiring tax cut amounts to a tax increase. TheWashington Post is out with this nifty calculator to help you see if your taxes would go up next year under Obama's plan, which extends the cuts for families earning $250,000 or less. A work packet for House Republicans obtained by TPM actually spells out the situation almost accurately: "Washington Democrats are poised to allow the largest tax increase in American history to take effect next year."
The word "allow" is key -- the whole point is that they were written this way.
It's true that Obama has repeatedly insisted he'll let them expire and rebuffed suggestions from tax-cut-friendly Democrats such as Sen. Max Baucus to extend them during this tough economic time. But is it really fair to call it a time bomb set by the president? Hardly.
Let's roll tape.
It's May 26, 2001, and the Senate, with just 12 Democrats on board, passes the Bush tax cuts. The House approves the tax cuts too, and 28 Democrats vote "yes." They cost $1.35 trillion and were set to expire to comply with Congressional rules, triggered by the GOP's use of reconciliation, that required they either expire within 10 years or not increase the deficit. So, the "tax increase" was written that way -- by Republicans.
June 7, 2001. President Bush signs the tax cuts, seemingly unaware of the ticking time bomb within. He declared:
A year ago tax relief was said to be a political impossibility. Six months ago it was supposed to be a political liability. Today it becomes reality. It becomes reality because of the bipartisan leadership of the Members of the United States Congress, Members like Bill Thomas of California, Ralph Hall of Texas, Charles Grassley of Iowa, Max Baucus of Montana, Zell Miller of Georgia, John Breaux of Louisiana, Trent Lott of Mississippi and the entire leadership team in the Senate, and Denny Hastert of Illinois and the leadership team in the House of Representatives--some Democrats, many Republicans--who worked tirelessly and effectively to produce this important result.
In 2003, the Republican-controlled Congress approved another tax cut measure, which accelerated some of the benefits they'd put in place the year before. That also was set to expire.
Fast forward to Bush's 2008 State of the Union address, when he urged Democrats controlling Congress to make his tax cuts permanent:
Unless Congress acts, most of the tax relief we've delivered over the past seven years will be taken away. Some in Washington argue that letting tax relief expire is not a tax increase. Try explaining that to 116 million American taxpayers who would see their taxes rise by an average of $1,800.
This is going to be a major topic of debate this fall before the midterm elections. Of the 12 Democratic senators who backed the tax cuts nine years ago, 7 are still serving. Baucus already has made his preference known. The others? Sens. Blanche Lincoln (AR), Ben Nelson (NE), Dianne Feinstein (CA), Tim Johnson (SD), Herb Kohl (WI) and Mary Landrieu (LA). (Sen. Arlen Specter, then a Republican, also voted for the tax cuts.)
Bill Clinton managed to pass "the largest tax hike in history" (as it was characterized at the time) around 1993. How did the economy do after that? It boomed. George Bush passed a bunch of tax cuts after being elected. How did the economy do after that? The boom ended and there was just so-so growth. Eventually, it collapsed. The idea that tax policy affects the economy seems to have no actual real-world proof. Other factors are far more important (e.g., the collapse of the banks had little to do with tax policy).
Slate.com recently juxtaposed current footage of Republicans claiming that tax cuts don't have to be paid for with budget cuts, because they "pay for themselves," against GHW Bush's "voodoo economics" accusation against Reagan early in the 1980 campaign. They posted a graph that shows how the budget deficit has varied under Democratic and Republican presidents since 1970 (guess who's deficits are a LOT bigger?). For those of you who plan to vote in November, and you absolutely should, I would strongly urge you to consider this data when choosing candidates to support. It's pretty compelling.
- Click HERE for part 2 of this post -