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WASHINGTON, D.C. – President Obama and legislators who passed the bill that supposedly averted the so-called “Fiscal Cliff” believe higher taxes are not only necessary but should be welcomed.
Before the bill was passed a few days ago, the president linked a willingness to pay higher taxes with both Hurricane Sandy and the killing of innocent children at Sandy Hook Elementary School:
“After what we’ve gone through over the past several months, a devastating hurricane and now one of the worse tragedies in our memory, the country deserves the folks to be willing to compromise for the greater good.”
Washington continued its mantra that it only wanted to raise taxes for the top 2% while guaranteeing taxes would not go up for the middle class. In fact, there were 13 tax raises that when into effect on January 1, 2013 and a number of them that directly affect those not considered part of the 2%.
1. Payroll tax: increase in the Social Security portion of the payroll tax from 4.2 percent to 6.2 percent for workers. This hits all Americans earning a paycheck—not just the “wealthy.” For example, The Wall Street Journal calculated that the “typical U.S. family earning $50,000 a year” will lose “an annual income boost of $1,000.” Obviously this tax increase hits the lower income and middle class wage earners the hardest.
2. Top marginal tax rate: increase from 35 percent to 39.6 percent for taxable incomes over $450,000 ($400,000 for single filers).
3. Phase out of personal exemptions for adjusted gross income (AGI) over $300,000 ($250,000 for single filers).
4. Phase down of itemized deductions for AGI over $300,000 ($250,000 for single filers).
5. Tax rates on investment: increase in the rate on dividends and capital gains from 15 percent to 20 percent for taxable incomes over $450,000 ($400,000 for single filers).
6. Death tax: increase in the rate (on estates larger than $5 million) from 35 percent to 40 percent.
7. Taxes on business investment: expiration of full expensing—the immediate deduction of capital purchases by businesses. There is a myth being perpetrated by both the president and the media that all business owners are wealthy. Mom and pop businesses require capital purchases just like corporations, but can no longer find tax relief when those improvements need to be made.
Obamacare tax increases that took effect:
Obamacare contains twenty new or higher taxes. Five of the taxes hit for the first time on January 1. In total, for the years 2013-2022, Americans face a net $1 trillion tax hike for the years 2013-2022.
8. Another investment tax increase: 3.8 percent surtax on investment income for taxpayers with taxable income exceeding $250,000 ($200,000 for singles).
9. Another payroll tax hike: 0.9 percent increase in the Hospital Insurance portion of the payroll tax for incomes over $250,000 ($200,000 for single filers).
10. Medical device tax: 2.3 percent excise tax paid by medical device manufacturers and importers on all their sales. Anyone needing a knee or hip replacement will see that expense passed down to them regardless of their income.
11. Reducing the income tax deduction for individuals’ medical expenses.
12. Elimination of the corporate income tax deduction for expenses related to the Medicare Part D subsidy.
13. Limitation of the corporate income tax deduction for compensation that health insurance companies pay to their executives.