What Happens To Your Taxes On January 1, 2011

On Friday, the Daily Caller posted an article by Representative Joe Pitts, who represents Pennsylvania's Sixteenth Congressional District, detailing how the failure of Congress to extend the Bush Tax Cuts will impact taxpayers. 

Representative Pitts points out that unless Congress acts to extend the Bush Tax Cuts, the nation will see a $3.8 trillion tax increase on January 1, 2011.  When Democrat leaders announced that the House of Representatives would adjourn without considering acting on taxes, every Republican and 39 Democrats voted against adjournment. 

In the article Representative Pitts named some of the tax increases coming to average Americans:

• The Child Tax Credit changes from $1,000 per child to $500 per child.
• The marriage penalty returns.  The standard deduction for married couples is currently twice the amount of the deduction for single people.  As of January 1, the standard deduction for married couples changes to $9,750.  It will be $5,800 for single taxpayers.
• The top rate of Capital Gains will go from 15 percent to 20 percent.  The tax rate on qualified dividends will change from 15 percent to 39.6 percent.  According to Representative Pitts, more than 26 million Americans will pay $1,240 more on investment income in 2011.  More than one-third of those Americans are Senior Citizens who depend on investment income to live.  One accounting firm reports that 65 percent of dividends were on tax returns of people making less than $100,000.  One third of dividends were on tax returns of people making less than $50,000 a year.

The expected tax increases will have a negative impact on the overall value of the stock market.  As much as the White House likes to demonize Wall Street, many young people in the work force are depending on Wall Street for their retirement income.  The abundance of 401k plans in the workplace is (among other things) a reflection of the lack of confidence in Social Security.  There are very few major companies who do not have 401k plans.

It was an act of cowardice to adjourn without dealing with the tax situation, but keep in mind that there is a deficit panel that is to report to Congress AFTER THE ELECTION.  At that point, I expect to see major tax increases in many areas.  The only way to stop those increases (and cut spending and growth of government) is to vote Republican in November.  The Democrat Congress has shown that they simply cannot be counted on to control spending or taxes.  They need to be sent home.  If the new Republican Congress cannot control spending or taxes, they also need to be sent home in 2012.  We need to elect people who will do their job!