Less Than Six Months Until the Largest Tax Hikes In History

"No family making less than $250,000 a year will see any form of tax increase."
-- Barrack Obama, September 12, 2008

In just under six months, the largest tax hikes in the history of America will take effect. 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 20 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 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 their purchases of equipment. In January of 2011, 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.

(Prepared by Americans for Tax Reform)

USDA Official Featured In Previous Post Fired and Ignored by Media

On Monday, Andrew Breitbart, on his blog Big Government, revealed video of a Department of Agriculture official making racially charged comments at an NAACP meeting in March. While the media were quick to jump on the civil rights organization accusing the tea party of racism last week, they have failed to provide any coverage of this controversy.

The comments were made by the USDA's Georgia Director of Rural Development Shirley Sherrod at a NAACP Freedom Fund dinner in Georgia on March 27 (see post below). As the video clearly shows, Sherrod's description of discriminating against white farmers was well received by the audience. The comments, which were reported throughout the day Monday on Fox News, stirred so much controversy that Sherrod resigned Monday night and Agriculture Secretary Tom Vilsack was forced to issue a statement on the matter: "“There is zero tolerance for discrimination at USDA, and I strongly condemn any act of discrimination against any person.”

As NewsBusters' Noel Sheppard earlier reported, none of the network evening news broadcasts touched the story on Monday . On Tuesday, the CBS Early Show, NBC's Today, and ABC's Good Morning America were all silent on the controversy and resignation. However, all three morning shows did manage to focus on a recent verbal gaffe made by Sarah Palin.

— Courtesy of Kyle Drennen, Media Research Center

NAACP Bigotry In Their Ranks

While the "civil rights" leadership and Mainstream Media continue to denounce Tea Partiers as racists and bigots, no evidence is ever produced to prove their point.  This was most noticable when the Left tried going after those who publicly opposed the passage of ObamaCare earlier this year.  Member after member reported that they were spit upon and cursed enroute to the final vote, yet no one as ever produced one trace of evidence in audio or video form.  Every major television network was there plus everyone with their cell phones, BlackBerries, and iPhones, which could have captured all the hatred spewed toward African American members of the House and Senate. 

Take a look at the video below of obvious racism and see how much television coverage this incident will receive -- hypocracy at the highest level!  Someday all Americans, regardless of race, are going to say, "enough is enough!" and stop supporting and giving in to advocacy groups like the NAACP, which spends more time, money, and energy supressing the black community and inciting racial tensions than doing good.

Washington Post Finally Admits to Ignoring Black Panther Story

Thumbs up to the gutsy Ombudsman of the Washington Post, Andrew Alexander, for owning up to the obvious -- the Post did not give proper attention to shanagans going on at the Justice Department regarding the lawsuit related to the New Black Panther Party 2008 election day incidents in Philadelphia.  Here is Mr. Alexander's piece from yesterday's Post:

Why the silence from The Post on Black Panther Party story?

By Andrew Alexander
Ombudsman
Sunday, July 18, 2010

Thursday's Post reported about a growing controversy over the Justice Department's decision to scale down a voter-intimidation case against members of the New Black Panther Party. The story succinctly summarized the issues but left many readers with a question: What took you so long?

For months, readers have contacted the ombudsman wondering why The Post hasn't been covering the case. The calls increased recently after competitors such as the New York Times and the Associated Press wrote stories. Fox News and right-wing bloggers have been pumping the story. Liberal bloggers have countered, accusing them of trying to manufacture a scandal.

But The Post has been virtually silent.

The story has its origins on Election Day in 2008, when two members of the New Black Panther Party stood in front of a Philadelphia polling place. YouTube video of the men, now viewed nearly 1.5 million times, shows both wearing paramilitary clothing. One carried a nightstick.

Early last year, just before the Bush administration left office, the Justice Department filed a voter-intimidation lawsuit against the men, the New Black Panther Party and its chairman. But several months later, with the government poised to win by default because the defendants didn't contest the suit, the Obama Justice Department decided the case was over-charged and narrowed it to the man with the nightstick. It secured only a narrow injunction forbidding him from displaying a weapon within 100 feet of Philadelphia polling places through 2012.

Congressional Republicans pounced. For months they stalled the confirmation of Thomas E. Perez, President Obama's pick to head the Justice Department's Civil Rights Division, while seeking answers to why the case had been downgraded over the objections of some of the department's career lawyers. The Justice Department's Office of Professional Responsibility launched an investigation, which is pending. The independent, eight-member Commission on Civil Rights also began what has become a yearlong probe with multiple public hearings; its report is due soon. Rep. Frank R. Wolf (R-Va.), a prominent lawmaker in The Post's circulation area, has been a loud and leading critic of how the case was handled. His office has "aggressively" sought to interest The Post in coverage, a spokesman said.

The controversy was elevated last month when J. Christian Adams, a former Justice Department lawyer who had helped develop the case, wrote in the Washington Times that his superiors' decision to reduce its scope was "motivated by a lawless hostility toward equal enforcement of the law." Some in the department believe "the law should not be used against black wrongdoers because of the long history of slavery and segregation," he wrote. Adams recently repeated these charges in public testimony before the commission.

The Post didn't cover it. Indeed, until Thursday's story, The Post had written no news stories about the controversy this year. In 2009, there were passing references to it in only three stories.

That's prompted many readers to accuse The Post of a double standard. Royal S. Dellinger of Olney said that if the controversy had involved Bush administration Attorney General John D. Ashcroft, "Lord, there'd have been editorials and stories, and it would go on for months."

To be sure, ideology and party politics are at play. Liberal bloggers have accused Adams of being a right-wing activist (he insisted to me Friday that his sole motivation is applying civil rights laws in a race-neutral way). Conservatives appointed during the Bush administration control a majority of the civil rights commission's board. And Fox News has used interviews with Adams to push the story. Sarah Palin has weighed in via Twitter, urging followers to watch Fox News anchor Megyn Kelly's coverage because "her revelations leave Left steaming."

The Post should never base coverage decisions on ideology, nor should it feel obligated to order stories simply because of blogosphere chatter from the right or the left.

But in this case, coverage is justified because it's a controversy that screams for clarity that The Post should provide. If Attorney General Eric H. Holder Jr. and his department are not colorblind in enforcing civil rights laws, they should be nailed. If the Commission on Civil Rights' investigation is purely partisan, that should be revealed. If Adams is pursuing a right-wing agenda, he should be exposed.

National Editor Kevin Merida, who termed the controversy "significant," said he wished The Post had written about it sooner. The delay was a result of limited staffing and a heavy volume of other news on the Justice Department beat, he said.

Better late than never. There's plenty left to explore.

Walker Continues to Lead Barrett In Wisconsin Polling for Governor

Here's the latest from Real Clear Politics in terms of this year's governor race in Wisconsin.  RC Blog's favorite Scott Walker continues to lead in all the recent polls by an average of nearly nine points.

http://www.realclearpolitics.com/epolls/2010/governor/wi/wisconsin_governor_walker_vs_barrett-1184.html