Tax Cuts or Tax Increases – Take Your Pick

Like it or not, you are going to pay higher taxes.  They come in many different forms like President Obama not renewing the Bush tax cuts, local government raising property taxes, states increasing income and sales taxes and politicians dreaming up new ways to tax you, like a three-cent tax on soda or sugar drinks to help pay for Obama’s 1 trillion dollar health care plan.  Who’s to blame, America?  Frankly, you are!  In some weird way, we’ve trained our politicians to keep spending money and give us “free stuff” (handouts and programs) and that financial accountability doesn’t matter as long as I get my share.  You want all this “free stuff” from uncle Sam, but how often do you stop to think that the only place government gets money from is by taking it from those that work and redistributing it in the least efficient way to buy votes.

A Partial List Of New or Higher Taxes Coming Your Way:

Federal Income Taxes
If you earn an income, your tax burden is going to go up with the Obama plan and the expiration of the Bush tax cuts (set to expire on December 31^st 2010).  Beginning January 1^st, 2011 expect the following tax rates:

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%

The marriage penalty will once again capture married couples with similar incomes beginning 2011.  This unlikely snare has a married couple paying more taxes than two individual tax payers.

If you save, the Obama administration wants a greater share of your savings.  Long term capital gains held less than 5 years will increase from 15% to 20% in 2011 and dividends will see a tax increase from 15% to as high as 39.6% (depending on your tax bracket) in 2011.

The death tax comes roaring back.  If you die this year there is no death tax.  If you die after January 1, 2011 the death tax is 55% on those estates that are worth more than 1 million; a figure that is easy to reach if you have worked most of your life and own your own home.

AMT should be counted as a four letter word; it certainly has the stigma of one.  Come 2011, an estimated 27 million additional tax payers will learn exactly what AMT (Alternative Minimum Tax) is.  Some estimates show that an additional 27 million people will get stung by the AMT and pay approximately $3500 in additional federal taxes.

Remember the promise of taxes being raised on just the wealthy?  Well, semantics aside, we will all pay higher federal income taxes next year.  Sure, the wealthier you are the more you can expect to pay, but it seems clear to me that the low income and middle class will share the greatest percentage burden of the tax increase.