Taxmaggedon Is Real, So Is the Recession It Will Bring With It

September 30, 2012
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In July, the top-ranking Democrat female senator, Patty Murray of Washington, laid down the Democrats new marker on taxes which allows for no compromise on their plan.

“Unless Republicans end their commitment to protecting the rich above all else, our country is going to have to face the consequences of Republican intransigence,” she said in a speech.

The potential combination of all the Bush tax cuts expiring and $110 billion in defense and domestic spending cuts set to kick in at the end of the year has come to be referred to as the “fiscal cliff.” Economists have warned that the one-two punch could push the fragile economy back into a recession at the start of 2013.

Republican Senate leader Mitch McConnell, speaking on the senate floor at the time said,

“What the Democrats are proposing today is an entirely avoidable, high-stakes game of chicken.”

On July 9th of this year, President Obama, moving to the left of Nancy Pelosi and Chuck Schumer, announced that he supports a one-year extension of the Bush tax cuts for those making under $250,000, a plan that put him at odds with House Minority Leader Nancy Pelosi (D-Calif.) and Sen. Chuck Schumer (D-N.Y.), each of whom backed extending the tax cuts for people making up to $1 million. [Notice it is only a one-year extension!]

Obama’s plan will sock the country with a huge tax increase even as the economy continues to stagger.

Will we save billions or go over the cliff? That is what we are facing.

Republicans charge that Democrats are steering the nation back into economic recession.

“In their near-fanatical crusade to inflict even more pain on American businesses, Democrats are now openly admitting that they plan to wait until this debate reaches full throttle and Americans are panicked about the outcome to do anything, because they think it will make it likelier they’ll get their way,” said Senator Mitch McConnell of Kentucky, the Republican leader. “And if they don’t, then so be it. They’re ready to accept the economic and fiscal consequences.”

 

IMF Chief, Christine Lagarde, speaking before the Peterson Institute  for International Economics last Tuesday, expressed concern over the approaching 1/1/13 Taxmaggedon which will result in a 2% point decline in our GDP that will in turn eliminate growth in the U.S.

Lagarde now joins our CBOFederal Reserve and many economists sounding the alarm of our approaching fiscal cliff which will throw us into recession. It will also decimate our military.

A recent report by accountants at Ernst & Young, found that President Obama’s proposed tax hike would shrink the economy by 1.3% and shed 710,000 from the American workforce.

The National Federation of Independent Business and the U.S. Chamber of Commerce are also sounding the alarm.

Federal Reserve Chairman Ben Bernanke recently told the Senate Banking Committee that our country’s economic recovery “could be endangered by the confluence of tax increases and spending reductions that will take effect early next year if no legislative action is taken.”

Lagarde speaking about the possible effects on the global recession if the U.S. Taxmaggedon hits, said:

“This is true everywhere. But the current uncertainty presents a serious threat for the United States and, as the world’s largest economy, for the global economy.”

She added:

“So we all hope that, despite political calendars, which anywhere in the world entail a degree of uncertainty and unpredictability, there will soon be enough political clarity and no political games in order to actually focus on removing this uncertainty and making sure that both the issue of the fiscal cliff and the issue of the debt ceiling are addressed properly.”

 

Unless the president and congress act, U.S. taxpaying citizens will be hit with the largest tax increase in history [total dollars] within five months. This is not a Republican talking point – it’s real.

  • Income taxes will go up on every single taxpaying American.
  • The Alternative Minimum Tax, designed decades ago to ensure that 154 wealthy Americans paid income taxes, would hit an additional 27 million Americans with a $92 billion tax hike.
  • The death tax will come roaring back — hitting farmers, ranches and businesses.

How much will it cost you?

The Tax Policy Center says the cuts—which affect things including  marginal income tax rates, marriage penalty rates and the estate tax—will result in 83 percent of U.S. households facing an average of  $3,701 in tax increases. Ninety-eight percent of households with income above $50,000 will be affected.

  •  A family of four earning $50,000 would see their tax bill go up by $2,200.
  • A single mother with a $36,000 a year paycheck would see $1,100 more go to Uncle Sam.
  • And a married senior citizen couple with $40,000 in income would see their taxes double — paying $1,700 in higher taxes.

You can figure out how much it will cost you:

  • The  U.S. House of Representatives’ Committee on Small Business has created  what it calls a “one stop shop for information” on the tax cuts. The website has a list of expiring 2001 and 2003 tax provisions thatmost affect small business.
  • It also has a list of expiring tax extenders that will affect small  business, plus a link to a report from the nonpartisan Joint Committee on Taxation, which found that the amount of flow-through business  income that would be subject to President Obama’s proposed tax hike  has increased from 50 percent in 2011 to 53 percent in 2013, with the  number of entities subject to the tax increase going up from under  750,000 in 2011 to approximately 940,000 in 2013. Most small  businesses are organized as flow-through entities: partnerships,  limited liability companies, S corporations and sole proprietorships.
  • Lastly, there is a link to an Ernst & Young study that predicts tax hikes would eliminate 710,000 jobs in 2013.

 
President Obama wants four more years so he can do more of this:

I can’t wait! Who wouldn’t be thrilled with this record. Apparently 38% of our countryman believe this is a good economic record. At least the polls indicate that is the case.

 

The President will allow the extension of some tax cuts but not for “millionaires” who make $250,000, which will affect a million small businesses. [President Obama originally promised it would only affect millionaires and billionaires]

According to Orrin Hatch, he and the other Republicans have proposed stopping these tax increases for all Americans. As the top Republican on the Finance Committee, he has put forward a proposal to prevent the largest tax hike in history from taking place and to pave the way for comprehensive tax reform in 2013.

If Congress doesn’t agree with President Obama’s plan to raise taxes on one of the most productive segments of our economy by allowing the top two marginal tax rates to expire, Washington Democrats’ default position appears to be to let everyone’s income tax rates skyrocket.

The Senate Democrats’ plan would hit just under 1 million small business owners who file their taxes not as C corporations but as individuals. These are the job creators trying to lead our economic recovery and the Democrats seek to raise their taxes substantially. That doesn’t make any sense.

Orrin Hatch is bringing his case directly to the American people:

  • Fundamental tax reform would lower marginal income tax rates that would lead to more hiring, greater capital formation, better returns on our investments and a stronger economy.
  • A simpler tax code means that many of the resources currently poured into complying with the tax laws could be put to other uses — investing in new businesses, paying for our children’s education, and giving money to charitable causes, to name a few.
  • This is not a time for political games, divisiveness and vilifying business and industry. Businesses continue to sit on the sidelines because they don’t know what Washington is about to throw at them. The uncertainty is holding them back, and it’s stifling our economy.
  • Let’s extend current tax rates for a year to give job creators and working families some certainty, then roll up our sleeves and pass meaningful tax reform to ensure America remains the leader we know it to be.

 

The estate tax which will go to 50% is outright thievery. Some say that businesses have well-prepared for it but others have said that they are focusing on navigating estate planning waters instead of growing their businesses. They have to figure out how to pass the business to the children without dismantling it in an ever-changing tax environment.

 

Last year, President Obama said he wanted to tax millionaires and billionaires.

Now Obama is offering a one year extension on tax cuts (Clinton tax hikes) for all and is including raising taxes on anyone making $250,000, which includes small business owners. After the one year extension, that $250,000 will come down yet again because this is not a viable plan to save the economy and they will soon need more money.

Sure we have “controlled inflation,” the VAT tax, the global tax, but they will still come after YOU!

All information for this article can be found at  AFR,  CNN, and  open forum

The article, Obama’s tax plan will impoverish the middle class, also speaks to taxing the “wealthy” who make $250,000.

 

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