Tax Increases that will Take Place in 2011

Following are some of the tax increases that will take place in 2011, from Rush Limbaugh broadcast on 7/8/2010:

(1) …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.

(2) Personal income tax will rise. 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 $1,000 to $500 per (crumb cruncher). 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.

(3) …The Death Tax will resume. 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 [six months]. The dividends tax will rise from 15 percent this year to 39.6 percent in [six months]. These rates will rise another 3.8 percent in 2013. Then the “second wave” of taxes to hit will be those attached to Obamacare…

(4) 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… The ‘Special Needs Kids Tax’: this provision of Obamacare imposes a cap on flexible spending accounts (FSAs) of $2,500. (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.

(5) Under tax rules, FSA dollars can be used to pay for this type of special needs education, but no more, starting in six months. Then there’s “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. Then there’s a “Third Wave: The Alternative Minimum Tax…will ensnare over 28 million families, up from 4 million last year… Small business expensing will be slashed and 50% expensing will disappear”… So the money saved from depreciation and expenses will now go to the federal government in the form of higher taxes, leaving less money in the business to hire new employees or offer benefits and salary increases to existing employees.

(6) In fact, 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.