By Amy Payne
The Heritage Foundation
On this Halloween, a truly frightening specter is looming.
No amount of garlic, crosses, or exorcists can help us—only Congress and the President can chase this ghoul away.
It’s Taxmageddon.
A horrifying combination of expiring pro-growth tax policies from 2001 and 2003, the end of the once-temporary payroll tax cut, and just a few of Obamacare’s 18 new tax hikes, Taxmageddon will be the largest tax increase EVER to hit Americans. It’s nearly $500 billion in one year, starting January 1. That’s two months away.
The number $500 billion is rather large and abstract, so The Heritage Foundation has broken down the expected tax increases per person just for 2013:
- 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 if that isn’t scary enough, the nonpartisan Congressional Budget Office has forecastedanother recession in the coming year. The last thing this country needs is another recession, after years of high unemployment and months of a sluggish, barely noticeable recovery.
The tax hikes will hit small businesses very hard—and not just any small businesses, but the ones that create jobs. As Heritage’s Curtis Dubay and Romina Boccia explain:
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.
There’s one way to address Taxmageddon—reverse it.
Why hasn’t Congress acted to prevent this? Simple: The House passed a bill that would prevent the largest share of Taxmageddon, but the Senate failed to finish the job.
It appears this job will fall to the next Congress now. When the new Congress takes office on January 3, 2013, after counting the electoral votes for the presidency, the first order of business should be to reverse Taxmageddon. The congressional leadership and the successful presidential candidate should make clear right after the election that reversing Taxmageddon will be their top priority, to reassure businesses and employees as soon as possible.
If this future Congress also fails to act, as the current Congress has, then trick-or-treaters for years to come will tremble at the telling of this tale—a Congress who, when economic darkness threatened, chose this cruel and mysterious route of making things worse.
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Ha Ha! Figures lie and liars figure!
The largest part of this tax “increase” will be the expiration of the Bush era Tax cuts for the rich. This will have zero impact on the average Mainer. Millionaires like our legislators will be hit with a good size number but it is a pittance in relationship to their income.
The average Mainer will be much more impacted by the expiration of the payroll tax break, which the Republican house has refused to extend.
Like I say, Figures lie and Liars figure, Amy!
Matt Sparrow, you need to brush up on your tax code. In fact, most of Maine’s small businesses file through the individual income tax as a sole-proprietor, partnership, LLC, or S-corporation. Many so-called “rich” taxpayers are simply business owners with this pass-through business income.
Increasing their tax burden will negatively impact Mainers since these businesses will have less money to invest and hire new workers. For more information, see my recent study using Maine data: http://www.mainepolicy.org/wp-content/uploads/Path-to-Prosperity-Who-Are-Maines-Taxpayers-031812.pdf.
J. Scott (what a creepy name) has been widely discredited for twisting facts to meet his world view. The number of “small businesses” you refer too are mostly one person operations that have not prayer of hiring anyone. And they are much in the Minority of those affected by the restoration of the Bush tax cuts. Those most affected are the very rich.
Figure lie and Liars figure, J. Scoot , my boy
Matt Sparrow, I really appreciate your opinion, but what you have provided is only that–an opinion. Every large business begins as a small business, so I fail to see your point. The data I used in my study is straight from the IRS. All I’ve done is simply put it into a chart. If you believe the IRS is also full of liars, well then I really don’t know what else to say.
Ummmm–Scoot? you don’t appreciate my opinion at all. Stop being condescending. It’s not becoming.
you TP types love to bring up the small business owner making $250K as the poster child for why the Bush tax cuts should not lapse. I figure the change would cost those earners about a $100 bucks a week, straight up. How much hiring can they do with that?
And exactly how many of these folks are there?
Oh and the chart? nice job with the smoke and mirrors.
Don’t let the facts get in the way, now….
Sparrow, your bird-brained commentary is decidedly uncivil; and in terms of tax policy you’ve been out pecked….IN fact, I see a large cat in your future.
Scott is right, Maine is flush with sole proprietor ships and they flocked(no pun intended) to DirigoChoice and putting a lot of private insurers out of business. In essence instead of a family policy, the ‘family’ is now insured under DirigoChoice and paying less. SCAM or bad legislation? Or just opportunistic progressive liberals?
Keep it civil and professional, and leave out your crude playground ‘humor’.
Not worth arguing with someone like Sparrow. If you look at his Facebook photo, he is very similar to many of the other ill-informed, hateful liberals who resort to name calling when they don’t like the facts. There is nothing between his ears but empty white space.