National Debt Clock

Friday, July 2, 2010

Six Months to Go Until the Largest Tax Hikes in History

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 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.

Tuesday, April 13, 2010

Nation Faces Shortage of 150,000 Doctors in 15 Years
The new federal health-care law has raised the stakes for hospitals and schools already scrambling to train more doctors.

Experts warn there won't be enough doctors to treat the millions of people newly insured under the law. At current graduation and training rates, the nation could face a shortage of as many as 150,000 doctors in the next 15 years, according to the Association of American Medical Colleges.

That shortfall is predicted despite a push by teaching hospitals and medical schools to boost the number of U.S. doctors, which now totals about 954,000.

Wednesday, April 7, 2010

Health Care Overhaul Spawns Mass Confusion for Public

Two weeks after President Barack Obama signed the big health care overhaul into law, Americans are struggling to understand how — and when — the sweeping measure will affect them.

Questions reflecting confusion have flooded insurance companies, doctors' offices, human resources departments and business groups.

"They're saying, 'Where do we get the free Obama care, and how do I sign up for that?' " said Carrie McLean, a licensed agent for The California-based company sells coverage from 185 health insurance carriers in 50 states.

McLean said the call center had been inundated by uninsured consumers who were hoping that the overhaul would translate into instant, affordable coverage. That widespread misconception may have originated in part from distorted rhetoric about the legislation bubbling up from the hyper-partisan debate about it in Washington and some media outlets, such as when opponents denounced it as socialism.

Monday, April 5, 2010

Obama Limits When U.S. Would Use Nuclear Arms

For the first time, the United States is explicitly committing not to use nuclear weapons against nonnuclear states that are in compliance with the Nuclear Non-Proliferation Treaty, even if they attacked the United States with biological or chemical weapons or launched a crippling cyberattack.

Regulatory Trends in the Bush Years

Despite the claims of critics-and some supporters-of the Bush Administration, net regulatory burdens have increased in the years since George W. Bush assumed the presidency. Since 2001, the federal government has imposed almost $30 billion in new regulatory costs on Americans. About $11 billion was imposed in fiscal year (FY) 2007 alone.

Critics of Bush Administration regulatory policy have argued that budget cuts are evidence that restric­tions are being loosened. Yet according to an analy­sis by George Mason University's Mercatus Center and Washington University's Weidenbaum Center, appropriations for federal regulatory agencies have increased during the Bush years from $27 billion in FY 2001 to $44.9 billion in FY 2007-a 44 percent increase in inflation-adjusted dollars.[12] The total staffing of regulatory agencies went up nearly as much, from 172,000 employees to over 244,000- a 41 percent increase.

During the first seven years of the Bush presi­dency, 98 such major rules were promulgated by federal agencies. Of those, 75 (more than 10 per year) increased regulatory burdens on Americans. This is significantly less than the rate during the Clinton Administration, which adopted major increases in regulation at a rate of some 19 times per year from 1997 to early 2001.[19]

Although the Bush Administration imposed fewer new burdens on Americans, the total regulatory bur­den continued to increase in absolute terms. Com­pared to the 74 rule changes that increased regulatory costs, only 23 rule changes reduced burdens. In other words, for every case in which regulators reduced a burden, they increased burdens over three times.

Wednesday, March 31, 2010

The 2009 Index of Dependence on Government

Obama, who 'Excluded Lobbyists', has Appointed 50

The appointment of the 50th lobbyist to a policymaking job by a president who claims he's "excluded" them.

It's important here to set the record straight about what a senator's "hold" is. A "hold" cannot prevent confirmation or even block a vote on confirmation -- that requires a 41-vote filibuster to block cloture or one-man filibuster right out of "Mr. Smith Goes to Washington." A "hold" is an objection to the unanimous-consent decree that would allow confirmation without debate.

So, most of Obama's recess nominations were not about circumventing a filibuster -- labor lawyer Craig Becker was the only one of the 15 who was being filibustered. The other 14 recess appointments were efforts to avoid debate and discussion. Obama says he just wants to get down to business. But given Obama's clear desire to portray his administration as lobbyist-free, it's also good politics to skip a public floor debate over four lobbyist appointees.

UK Pet Shop Owner Fined £1,000, Told to Wear an Electronic Tag...For Selling a GOLDFISH to a 14 Year Old Boy

Her offence was to unwittingly sell a goldfish to a 14-year-old boy taking part in a trading standards 'sting'.

At most, pet shop owner Joan Higgins, 66, expected a slap on the wrist for breaking new animal welfare laws which ban the sale of pets to under-16s.

Instead, the great-grandmother was taken to court, fined £1,000, placed under cufrew- and ordered to wear an electronic tag for two months.

Tuesday, March 30, 2010

The Wyden-Gregg Bipartisan Tax Reform Bill: Why Congress Should Listen

Despite protestations that the wealthy benefited the most from the 2001 and 2003 tax cuts, those reductions lowered taxes for all taxpayers and sped up a decades-long trend of moving the tax burden to a declining proportion of upper-income taxpayers. In 2006, the latest year of available data, the top 1 percent of income earners paid more than 40 percent of all income taxes. The bottom 50 percent paid just 3 percent of all income taxes.

On the corporate side, Wyden-Gregg does even better. The bill turns the progressive corporate income tax into a 24 percent flat tax. This lower rate would greatly increase the competitiveness of American businesses and make the United States a more attractive place for new business investment. With a flat rate of 24 percent, the U.S. rate would be below the average 25 percent rate of other developed countries in the Organisation for Economic Co-operation and Development (OECD).

The treatment of retirement savings is one of the strongest points of the Wyden-Gregg bill. The bill expands tax-free savings by consolidating the various forms of IRAs into one Retirement Savings Account and offers a new Lifetime Savings Account. These adjustments will allow families to put away up to $14,000 a year for retirement in addition to what they can save through 401(k) plans. These new opportunities would help families save for retirement and increase the savings rate. Further reducing taxes on all savings, not just for retirement, would encourage even more saving and investing and promote economic growth.

First, it reduces the number of tax brackets and rates for individuals from six to three. It also makes the corporate income tax a 24 percent flat tax. Second, it drastically reduces the number of credits, deductions, and exemptions for families and businesses. Lastly, it completely abolishes the AMT. In addition to reducing complexity, the abolition of the AMT will also remove the threat that the AMT will raise taxes on middle-income families. The AMT is intended to affect only high earners, but the minimum income that designates families for the AMT is not indexed for inflation.

Repealed Death Tax Would Liven Industry

It is a tremendous burden because, despite appearing valuable on paper, Reliable and other similar businesses do not have sufficient cash available to pay the tax. Reliable has many high-cost assets, such as bulldozers and dump trucks.

Social Security to Run Deficit in 2010

The Congressional Budget Office now predicts the Social Security fund will pay out more than it earns starting this year -- as in it’s happening right now.

That’s just a shade off of last year’s forecast, which expected the fund to run a deficit starting in late 2016.

Monday, March 29, 2010

A Healthy Dose of Catastrophe

Congress voted to subject the 28 percent tax benefit to the regular good ol' American-as-apple-pie corporate tax rate of 35 percent. For the purposes of comparison, Sweden's corporate tax rate is 26.3 percent, and Ireland's is 12.5 percent. But just because America already has the highest corporate tax in the Organization for Economic Co-operation and Development is no reason why we can't keep going until it's double Sweden's and quadruple Ireland's.

If you impose a sudden 35 percent tax on something, are you likely to get as much of it? Go on, take a wild guess. On the day President Obama signed Obamacare into law, Verizon sent an e-mail to all its employees warning that the company's costs "will increase in the short term." And in the medium term? Well, U.S. corporations that are able to do so will get out of their prescription drug plans and toss their retirees onto the Medicare pile. So far, just three companies - John Deere & Co., Caterpillar and Valero Energy Corp. - have calculated that the loss of the deduction will add a combined $265 million to their costs. An additional 3,500 businesses presently claim the break. The cost to taxpayers of that 28 percent benefit is about $665 per person. The cost to taxpayers of equivalent Medicare coverage is about $1,200 per person. So we're roughly doubling the cost of covering an estimated 5 million retirees.

Friday, March 26, 2010

2,000 House Staffers Make Six Figures

Nearly 2,000 House of Representative staffers pulled down six-figure salaries in 2009, including 43 staffers who earned the maximum $172,500 — or more than three times the median U.S. household income.

The 43 staffers who maxed out at $172,500 — the salary cap for leadership and committee staffers — include John Lawrence, chief of staff to House Speaker Nancy Pelosi; Paula Nowakowski, the late chief of staff to House Minority Leader John Boehner; and House Parliamentarian John Sullivan. They earned only slightly less than rank-and-file members of Congress, who make $174,000.

Obamacare Prescription: 'Emergency Health Army'

According to Section 5210 of HR 3590, titled "Establishing a Ready Reserve Corps," the force must be ready for "involuntary calls to active duty during national emergencies and public health crises."

The health-care legislation adds millions of dollars for recruitment and amends Section 203 of the Public Health Service Act (42 U.S.C. 204), passed July 1, 1944, during Franklin D. Roosevelt's presidency. The U.S. Public Health Service Commissioned Corps is one of the seven uniformed services in the U.S. However, Obama's changes more than double the wording of the Section 203 and dub individuals who are currently classified as officers in the Reserve Corps commissioned officers of the Regular Corps.

Wednesday, March 24, 2010

Obama Administration Awarded Hundreds of Thousands in Airport Grants to Stupak’s District 2 Days Before Vote

Was this Yet Another Backroom Deal to Force Obama’s Bill Down the American People’s Throats?

Three airports in the district of infamous fence-sitting and ultimately kowtowing Democrat Bart Stupak were awarded $726,409 in grants by the Obama Administration just two days before a vote on Obama and Pelosi’s government takeover of healthcare.

Did Stupak compromise his supposed principled stand against taxpayer funding of abortion in exchange for taxpayer dollars for pet projects?

Monday, March 22, 2010

Macroeconomic Effects of Obamacare
  • Result in an average of 115,000 lost job opportunities per year
  • Reduce productivity by an average 0.01 percentage points per year
  • Lose $1.37 in gross domestic product (GDP) for every dollar of additional revenue collected
  • Reduce household disposable income by $17.3 billion[1] per year
  • Reduce the stock of household real net wealth by an average $267 billion per year.

U.S. Risks AAA Rating

Two-year notes sold by the billionaire’s Berkshire Hathaway Inc. in February yield 3.5 basis points less than Treasuries of similar maturity, according to data compiled by Bloomberg. Procter & Gamble Co., Johnson & Johnson and Lowe’s Cos. debt also traded at lower yields in recent weeks, a situation former Lehman Brothers Holdings Inc. chief fixed-income strategist Jack Malvey calls an “exceedingly rare” event in the history of the bond market.

What House Passage of the Senate Health Bill Means for America

New Middle-Class Taxes. The President solemnly promised that he would not impose any new taxes on American households making less than $250,000. The Senate bill shatters this promise.

For example, the excise tax on high-cost health insurance plans would overwhelmingly hit middle-class taxpayers. Likewise, special federal premium taxes in the Senate bill would also be passed down to consumers, resulting in premium increases that would be higher than they would otherwise be.[6] In addition to taxes on health insurance, the Senate bill would also create new taxes on medical necessities such as prescription drugs and medical devices.[7]

Beyond these new taxes, the President’s proposal would add yet another provision (presumably for consideration in the budget reconciliation process) that would tax investment income. This would result in 115,000 lost job opportunities and a net reduction of $17.3 billion annually in household disposable income.[8] Amidst a recession, this is a stunningly bad idea.

Increased Health Insurance Premiums. The President initially promised that Americans would see a $2,500 annual reduction in their family health care costs. But under the Senate bill, premiums would go up for millions of Americans. In fact, according to the CBO, estimated premiums in the individual market would be 10–13 percent higher by 2016 than they would be under current law.[9]

Tuesday, February 2, 2010

Backdoor Taxes to Hit Middle Class

The Obama administration's plan to cut more than $1 trillion from the deficit over the next decade relies heavily on so-called backdoor tax increases that will result in a bigger tax bill for middle-class families.

In the 2010 budget tabled by President Barack Obama on Monday, the White House wants to let
billions of dollars in tax breaks expire by the end of the year -- effectively a tax hike by stealth.

While the administration is focusing its proposal on eliminating tax breaks for individuals who earn $250,000 a year or more, middle-class families will face a slew of these backdoor increases.
The targeted tax provisions were enacted under the Bush administration's Economic Growth and Tax Relief Reconciliation Act of 2001. Among other things, the law lowered individual tax rates, slashed taxes on capital gains and dividends, and steadily scaled back the estate tax to zero in 2010.

If the provisions are allowed to expire on December 31, the top-tier personal income tax rate will rise to 39.6 percent from 35 percent.
But lower-income families will pay more as well: the 25 percent tax bracket will revert back to 28 percent; the 28 percent bracket will increase to 31 percent; and the 33 percent bracket will increase to 36 percent. The special 10 percent bracket is eliminated.

Investors will pay more on their earnings next year as well, with the tax on dividends jumping to 39.6 percent from 15 percent and the capital-gains tax increasing to 20 percent from 15 percent. The estate tax is eliminated this year, but it will return in 2011 -- though there has been talk about reinstating the death tax sooner.

Millions of middle-class households already may be facing higher taxes in 2010 because Congress has failed to extend tax breaks that expired on January 1, most notably a "patch" that limited the impact of the alternative minimum tax. The AMT, initially designed to prevent the very rich from avoiding income taxes, was never indexed for inflation. Now the tax is affecting millions of middle-income households, but lawmakers have been reluctant to repeal it because it has become a key source of revenue.

Without annual legislation to renew the patch this year, the AMT could affect an estimated 25 million taxpayers with incomes as low as $33,750 (or $45,000 for joint filers). Even if the patch is extended to last year's levels, the tax will hit American families that can hardly be considered wealthy -- the AMT exemption for 2009 was $46,700 for singles and $70,950 for married couples filing jointly.

Middle-class families also will find fewer tax breaks available to them in 2010 if other popular tax provisions are allowed to expire. Among them:

  • Taxpayers who itemize will lose the option to deduct state sales-tax payments instead of state and local income taxes;
  • The $250 teacher tax credit for classroom supplies;
  • The tax deduction for up to $4,000 of college tuition and expenses;
  • Individuals who don't itemize will no longer be able to increase their standard deduction by up to $1,000 for property taxes paid;
  • The first $2,400 of unemployment benefits are taxable, in 2009 that amount was tax-free.

Palin Wants Rahm Fired

In a Facebook post, Sarah Palin calls on President Obama to fire Chief of Staff Rahm Emanuel for reportedly describing the strategy of Senate liberals as "f$&%*$&# retarded."

"Yes, Rahm is known for his caustic, crude references about those with whom he disagrees, but his recent tirade against participants in a strategy session was such a strong slap in many American faces that our president is doing himself a disservice by seeming to condone Rahm's recent sick and offensive tactic."