Yesterday Hot Air posted an article by J.E. Dyer on the tax increase scheduled for January 1. This tax increase has nothing to do with the super committee or any recent actions by Congress–it is simply the result of the expiration of the ‘Bush tax cuts.’ As you remember, the Republicans never had enough of a majority in Congress to make the Bush tax cuts permanent–they were renewed in a budget deal in December, but only for a year. Now the Clinton tax rates are set to come roaring back and totally devastate any economic growth that may be coming down the pike.
Some examples of the taxes involved show that the Bush tax cuts gave serious tax relief to middle class families. The article explains:
Bob Jennings at Fox Business ran some numbers for a young couple with two kids and combined income of $100,000. (H/t: Lonely Conservative.) Their tax bill would go up by nearly $3600 between 2011 and 2012, or about $300 a month. And that’s just federal income tax: they’re also paying property taxes (they have a mortgage), probably state income tax as well, and sales taxes and special excise taxes (e.g., federal gas tax) – plus they’re sending 13% of each of their earned incomes to Social Security and Medicare.
If you are a young family with children, $300 a month is significant. Unless Congress acts to continue the George Bush tax policies, more young families will struggle economically.
The article gives some specific examples of changes:
It’s not just rate increases for the “rich.” The 10% bracket goes away, with the lowest rate reverting to 15%; the child tax exemption goes from $1000 per child back to $500; the “marriage penalty” comes back in terms of personal exemptions – and those are just the changes that will be felt by the most people. Taxes on dividend income will go up as well, and all exemptions will be phased out as income rises (which will hit the small-business proprietors and professionals whose activities with their own money make an outsize contribution to economic growth and prosperity – not to mention dealing a blow to charities).
Hopefully, someone is Congress will prevent these tax increases from taking effect, but I am not optimistic. We need to constantly remind Congress–taxes are not too low–spending is too high!
