Taxmageddon is a dreadful combination of expiring pro-growth tax policies from 2001 and 2003, the end of the once-temporary payroll tax cut, and some of Obamacare’s 18 new tax hikes. It will be the largest tax increase to ever hit the U.S. This drastic tax increase begins on January 1 and represents $500 billion over the course of just one year.
Here’s a per person breakdown of that $500 billion, from The Heritage Foundation:
- Families with an average income of $70,662: tax increase of $4,138
- Baby boomers with an average income of $95,099: tax increase of $4,223
- Low-income workers with an average income of $24,757: tax increase of $1,207
- Millennials with an average income of $23,917: tax increase of $1,099
- Retirees with an average income of $42,553: tax increase of $857
And, there’s more…
Another recession has been forecast by the Congressional Budget Office (CBO). In addition to that, the tax hikes will have major impact on small businesses, specifically small businesses that create jobs!
Curtis Dubay, writing for The Heritage Foundation explains:
“The businesses that would pay the higher tax rates proposed by President Obama earn almost all the income earned by small businesses that employ workers. According to President Obama’s own Treasury Department, these job creators earn 91 percent of the income earned by flow-through employer-businesses. These are the biggest, most successful small businesses. They employ more than half the private workforce, according to an Ernst and Young study. Raising their taxes would destroy more than 700,000 jobs.”
Taxmaggedon needs to be reversed but Congress has failed to sufficiently address it. The house did pass a bill that would circumvent most of Taxmaggedon but the Harry Reid led Senate failed to complete the process.
The Senate passed a bill as well, but it only stops a small portion of Taxmageddon. And, the bill is far from being ideal–it continues the Bush tax policies only for those taxpayers earning less than $250,000 a year. In essence, it is a tax increase on job creators.
The responsibility now falls on the next Congress which will take office on January 3rd. But, there is no guarantee that it will be reversed.
Be sure to check out this infographic on how Taxmaggedon will impact you.