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Backdoor taxes to hit middle class

Backdoor taxes to hit middle class

POSTED: Tuesday, February 2, 2010 - 11:39am

UPDATED: Saturday, February 25, 2012 - 5:22pm

**Reuters has pulled this story

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.

Comments News Comments

Taxes are the price we pay for a Safe and Healthy Democratic Republic to maintain Justice, Equality, Peace, Tranquility, the General Welfare and the Blessings of Liberty for ourselves and our posterity.

Anyone with wisdom understands why it is far better to be a poor man in a wealthy nation than a wealthy man in a poor nation... for those with the most have the most to loose!

A new article should be written about the 45% cadallac tax on health plans that was in the Senate Bill that we narrowly avoided. Now watch the CAP and Trade legislation take a swipe at your wallet in higher green fees on Gasoline, electricity and natural gas. They don't even have to raise your Federal tax. The Democrats of Obama are coming at you indirectly and they think we are too stupid to notice.

These are backdoor hidden taxes targeting the middle class. Oh yes call them FEES and nobody can call Obama a liar.

abolish organized crime...do away with the federal government,let those that work ,eat,those that don't beg or do without.....the pot is running dry because of all the slugs that don't pull their own weight in this country...they need to get off their butt and get to work (not talking about ones who have always worked and the economic crap costs them a job) and quit sponging off the government...!!!
a government big enough to give you anything you want is big enough to take everything away from you!!!

"a government big enough to give you anything you want is big enough to take everything away from you" great line! right on. people need to get up and contribute

http://www.factcheck.org/elections-2008/more_tax_deceptions.html

It's very interesting to read the "deceptive" claims made by McCain's Ads that are coming true.

"The TV ad claims in a graphic that Obama would "raise taxes on middle class." In fact, Obama's plan promises cuts for middle-income taxpayers and would increase rates only for persons with family incomes above $250,000 or with individual incomes above $200,000."

"McCain falsely claimed Obama "says he'll raise taxes on electricity," though Obama has said no such thing and his tax plan contains no proposal for a tax on electricity."

"McCain stated that Obama would raise taxes "if you have an investment for your child’s education or own a mutual fund or a stock in a retirement plan."

To the guy who voted for Bob Barr... I'm sure Barack Obama voted for McCain, even though I'm a Libertarian, because there is no way that a vote for Barr would have resulted in anything but an Obama win.

However, I hope that every Congressman and Senator who didn't do anything to prevent the rape of the middle class by Federal taxation loses. Both major parties need to have their noses rubbed in this debacle.

Wonder who got to Reuters....

To the guy who voted for Bob Barr... I'm sure Barack Obama likes your work.

I voted for McCain, even though I'm a Libertarian, because there is no way that a vote for Barr would have resulted in anything but an Obama win.

However, I hope that every Congressman and Senator who didn't do anything to prevent the rape of the middle class by Federal taxation loses. Both major parties need to have their noses rubbed in this debacle.

Wonder who got to Reuters....

Let's try that again - somewhere between my computer and this Web site, the message was garbled badly:

To the guy who voted for Bob Barr... I'm sure Barack Obama thanks you.

I voted for McCain, even though I'm a Libertarian, because there is no way that a vote for Barr could have resulted in anything but an Obama win.

However, I hope that every Congressman and Senator who didn't do anything to prevent the rape of the middle class by Federal taxation loses his next election.

Both major parties need to have their noses rubbed in this debacle, along with the minor parties which aren't seeking coalitions with the majors to influence their policy toward sanity.

Wonder who got to Reuters....

" Backdoor taxes to hit middle class",eh? Backdoor is right.
Well you can't blame me,I voted for Bob Barr!

I hate very much to inform you--- but all this before is just the very tip of what is coming--- behold something is in the wind traveling fast in our direction for mid-year maybe as late as September--- the TAX that was once considered to be tabu, merely a myth, will fall heavily on the nation, the 2010 tax returns look very scientifically scaringly.

Hope and change. Hope... And... Change... I just hope I have change left by the time the next election comes around. This is Jimmy Carter all over again. But this time I do not see a Ronald Reagan in the wings though. How does it feel to have your wealth redistributed now? Take from those who do and give to those who govern irresponsibly.

yeh yeh - it is all the democrates problem - may be it is the change in the structure of congress now with more republicans in place and nothing can be done.

they need to replace all politicians with folks who have other jobs and go home and work those jobs when congress is not in session and they should work for free or minimal salaries ( just like the old days of jefferson and so on) then maybe they would be more down to earth and understand the lay hard working back bone of American society and economy-ie middle class.

get real - the middle class knows nothing is free ( not like the lower economic class who has given up or has failed to or stopped striving to " row their own boat" or who came here thinking america was free bees) and the middle class knows that to "make it" doesn't mean hurting others, cheating, leaving your neighbor hungry or all about the dollar ( unlike alote of the upper class or capitalistic companies who have forgotten not to step on others on your way up or cheat or sell out to other countries our jobs... some need to go serve the homeless be required to offer free services of legal and medical or computer knowledge or sleep for a week in anothers shoes so they don't forget where they came from and where their brother or sisters are at in life...)

PEACE

it is all about the story - i was amazed to see the above story pulled - right or wrong - i feel it should not have been pulled and am disappointed in why and who did that. the story had good info in it - another story could have been written to counter it instead of pulling the first one. what are we coming to when information is censured and free speach is violated and the news persons don't "give it to us - unbiased and unaltered" even if it might be through their narrow eyes of one reporter or editor or paper ( if that occurs).

Reuters pulled this story shortly after publication. That's curious.

Who does the administration have pulling the media's strings?

PANIC! PANIC! I TOLD YOU SO! PANIC! OH NOZ! PANIC! I LAUGH AT LIBERALS WHILE I PANIC! SELF-RIGHTEOUS AND INDIGNANT! HELP!

I AM AN IDIOT CONSERVATIVE! HELP!

I MEAN, EVERYONE PULL THEIR OWN WEIGHT AND COWBOY UP AND PERSONAL RESPONSIBILITY AND LIVE UNDER THE LAW OF THE BIBLE...LIKE THOSE TERRORISTS! HELP!

We were warned and are getting exactly what we voted for. Our only hope is for folks from other states to replace their democrat politicians with fiscally responsible ones. Where are the Statesmen of yesterday. November can't get here quick enough. Another campaign promise broken and we have nobody but ourselves to blame.

This is no surprise. There are more taxes on the way when cap and trade and the health care bill passes. Nancy Pelosi and Obama will "poll vault or parachute the bill through."
Looks as though the economic recovery everyone was wanting is not going to happen. When you have this many oppressive taxes people will not be able to have as much discretionary income to spend, if any.
This administration is deliberately taking America down one decision after the other and one czar after the other. There's more coming America.

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