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  • Morning Bell: What Tax Day Could Feel Like in 2013

    In addition to today being Tax Day, it’s also, coincidentally, “Tax Freedom Day” — meaning that it has taken from January 1 until now for Americans to earn enough money to pay this year’s federal, state, and local tax bill — 29.2% of all our income. In other words, for the first 111 days of the year, everything you earned went straight to Uncle Sam. Compare that to back in 1900, when Americans paid only 5.9% of their income in taxes and Tax Freedom Day came on January 22.

    The Tax Foundation reports that because of higher federal income and corporate tax collections, Tax Freedom Day came four days later this year than last. And the bad news is that unless Washington takes action, it will take working Americans 11 more days to meet next year’s tax burden.

    That’s all due to Taxmageddon — a slew of expiring tax cuts and new tax increases that will hit Americans on January 1, 2013, amounting to a $494 billion tax hike. Heritage’s Curtis Dubay reports that American households can expect to face an average tax increase of $3,800 and that 70 percent of Taxmageddon’s impact will fall directly on low-income and middle-income families, leaving them with $346 billion less to spend. Dubay explains some of the immediate impacts:

    If Congress fails to act, workers won’t have to wait very long to feel the effects. Every payday, they would see a jump in their payroll tax as it takes a bigger bite out of every paycheck. And that only reflects one of the direct hits they’ll face. They’ll feel the pain of other tax hikes they won’t pay directly, like the health care surtax on investment income and salaries over $250,000 — which begins in 2013 along with five other Obamacare tax hikes — because these hikes will slow job creation by taking away resources from businesses, investors, and entrepreneurs.

    That fact, though, isn’t making its way into President Obama’s talking points. He’s not mentioning that, absent action, Americans will pay higher income taxes, payroll taxes, and death taxes. He hasn’t spoken about the impending increase in the marriage penalty, the decrease in the child tax credit and the adoption credit, or how those who get tax breaks for education or dependent care costs will see them decreased. He hasn’t mentioned the new taxes under Obamacare, or how middle-income families will be forced to pay higher taxes under the Alternative Minimum Tax — a measure that was only supposed to impact “the rich.” Sound familiar?

    Instead of dealing with Taxmageddon, President Obama wants to change the subject with a gimmicky policy like the “Buffett Tax.” The Senate obliged him yesterday by voting on this distraction. Fortunately, it was rejected. Still, while President Obama trains his fire on this class warfare policy, he ignores that if Taxmageddon strikes, the lower and middle class Americans that he says he is fighting for will pay substantially more in taxes to the federal government starting on January 1. Call it the unadvertised side effect of Barack Obama’s failed leadership.

    President Obama talks about how this is not a “perfect world,” but in a better world Washington would get its act together, stop Taxmageddon, prevent the American people from suffering the effects of a massive tax hike, and unleash the economy from today’s uncertainty. Then President Obama and Congress would set their sights on fundamental tax reform like the New Flat Tax proposed in Heritage’s Saving the American Dream plan. That’s an attainable goal that doesn’t require perfection.

    Stopping a $494 billion tax increase shouldn’t be a contentious partisan issue. As President Obama might say “it just makes sense.” This is the perfect opportunity for Washington to show voters that it can do important things, even in an election year. When it comes to stopping Taxmageddon, the sooner the better.

    Quick Hits:

    Posted in Economics [slideshow_deploy]

    42 Responses to Morning Bell: What Tax Day Could Feel Like in 2013

    1. Firewalker says:

      Thanks for proving once again that you and Senator "No" McConnell are chiefs among those misrepresenting the facts about taxes and who pays them in this country.
      Thank you for mentioning the responsibility of Congress in its failure to act, but please be accurate in referring to President Obama, in that he does mention repeatedly Congress' failure to act, as in the recently Republican obstructed Buffet Rule to minimize the tax obligations of the 99% and minimally increase the tax obligations of the 1% in this unbalanced economy and tax system. You might mention that the Administration has offered numerous ways to balance the budget, only to be obstructed by Big Oil lobbyists and others on both sides of the political aisles in Congress.
      Will assume you are not speaking of the 1% when you mentioned " the first 111 days of the year, everything you earned went straight to Uncle Sam." because it certainly is not true for our elite collection of 1% tax break welfare corporations, kings, queens and sloths living off the tax breaks the rest of us do not and will very likely never receive.

      • Bobbie says:

        thanks for sharing your ignorance. You hear excuses and fail to see things through like everyone defending Obama. The wealth of people is none of the government''s business. Why do you weaken to want the focus on them when you won't get a dime of it anyway? what is raising taxes on the rich going to do for you personally that you can't do for yourself, Firewalker? Why don't you join the 1% instead of demonizing them? Why do you look to your president like a hero as the president lays punishment on some? How about government did the job they are constitutionally obligated to and held accountable? Costs and corruption wouldn't be extravagant in the government sector who today stand unaccountabie.

        When Obama told America " everybody has to sacrifice" it was cover only, to protect his agenda and favorites who will continue incompetence and fraud and whom the president is protecting from sacrifice?! The president and his personal select, are over paid and a disgrace to the good people of this country, only looking for more money to fund more ways to control all of America! The elite is in government: overpaid, underqualified, incompetent, derelict while mocking and thieving hard working Americans. Why don't you put your jealousy aside and keep yourself in control of your own? trusting the government strangers to control it for you is dangerous.

        You accept such low standards of those governing this country outside your control. Why don't you hold the president accountable to all in his control, like all previous Presidents? Why do you accept such a low level of performance at a $800,000.00 salary all expenses paid, higher than any other President? This president only has crisis and sacrifice to show for it. That's a high ugly price forced to be led by deception!

        Has the government of authority always been your hero? Republicans are trying to save this country while the president does everything in contrast for his own select and cover. He's got an attitude and hate problem against America(ns) and it shows. If you think salaries and all expenditures paid is worth intentional sacrifice and crisis it puts on people living free and independent, you have been wrongfully educated or simply not a good person following examples of others who are not good people.

        Half truths are worse than whole lies because half truths aren't easily realized as they mislead. People deserve the whole truth this American government connected to the President refuses.
        Excellent at pleading the fifth which no one in America should accept when their regard is not in our control while their pay is.

        • saveamerica says:

          I'd like to clarify my last sentence.

          Excellent at pleading the fifth which no one in America should accept when government regard is not in our control and government pay is at government discretion regardless of accountabilities which government hides from. This country wouldn't have gotten to where it did had people been hired just to throw a paycheck at which is what this country is suffering from!

      • Joe says:

        The reason you don't get the tax breaks that others get is because you probably don't earn enough money to fill out any tax return other than 1040EZ. There are many reasons for this including lack of ambition, lack of intelligence, or simply relying on government to take care of your every need. Stop blaming the 1% and for your failure. Great oportunities still exist in this great country.

      • FedupFred says:

        Firewalker, your brain may have burned out…but don't try to sell your Obama bullshit here. The members of heritage, and the majority of readers of this post know full well the rouse you democrats are trying to pull. Heritage has nailed it exactly right. It just pains me to no end that the republicans didn't do a staged photo opp like the the democrats do early on when this stupid statement (that Buffet's secretary pays more in taxes, or even pays a higher rate in taxes than Buffet does)…with charts, facts, figures, and graphs to shoved this damn lie back down your throats..and show to the world what a lying, deceitful bunch of Chicago style shysters the democrat party has turned into. We now have 50% of America not paying a dime in income tax when the dust settles. Many getting back more from the rest of us taxpayers than they pay in; some not paying anything in, yet getting "bonuses" for their lazy ass lifestyle leeching off the rest of us, voting in thieving democrats who rob from us and reward them for their votes. We are sick and tired of it. The top 10% pay over 70% of the taxes….the bottom 50% (of those who actually do end up paying in instead of receiving back) pay only 10% of the dollar total in taxes. You democrats continuously deceive your ignorant supporters. You incite jealousy, envy, hate, fear, and loathing for the people who make this country function. This is the only campaign tactic you've ever known, and ever used. Lord willing, we will be rid of this Chicago shyster gang next January. Oh, Lord let it be so.

      • belleboy says:

        Sorry, I do not buy into your class war-fare ideology. If you feel slighted, be my guest and write a check payable to the General Treasury of the USA.

    2. RG Schmidt says:

      "That fact, though, isn't making its way into President Obama's talking points. He's not mentioning that, absent action, Americans will pay higher income taxes, payroll taxes, and death taxes. He hasn't spoken about …"

      Of course Obama doesn't mention these things, it would be political suicide. That's the job of the RNC and, now that the party has apparently settled on one, the Republican candidate. These are the things all the candidates should have been talking about for the past year, instead of telling us what's wrong with all the other candidates. Maybe now they can finally get serious about educating voters on his agenda. Let us hope.

    3. Romney Dickinson says:

      I suggest that business owners that have a "net pay" of 1+ million, not sales, be taxed at an additional
      2.5 % and those that have a net pay of 2+ million be taxed at an additional 5%. A fair/equal and business/accounting approach would have to be established to determine a calculation for the "net pay" for business owners. At the same time eliminate the AMT for all except those who it was originally intended. I Harry Reid and obama won't eliminate the AMT, then put them in a political vise on this issue. The 2.5% and 5% won't hurt the middle class and the elimination of the AMT for most of us would be a great help. I am not a fed. employee or bureaucrat, or a finance/accounting expert, but this seems pretty fair and is a compromise and it puts the dems. on the spot.

      • Justsayin says:

        I suggest you not fall for the class warfare populism, and just let folks keep what they earn, and pay taxes on what they buy, not on what they earn. Get rid of he IRS and all current forms of Federal Income, Corp. Inheritance, AMT, every form of federal taxation and replace them with the FAIRTAX HR-25 already to go in Congress. It has 65 cosponsors, and is the only true salvation of this wrong headed catch 22 the income tax has brought us to. It's time to quit playing "one-ups-man-ship" with this stupid communist style tax code we currently have and replace it with one based in American individual ideals of freedom, and get rid of this division by class. We are all Americans… We DO NOT need a Communist system of taxation or any of these communist type programs Obama wants to foist upon us. Wake up, and Stand up. Let Freedom Ring!

    4. Frank says:

      Our government is totally corrupt & out of control! The Ds are now in control & are doing a worse job than the Rs who were in control prior, but that's not saying much. We need desperately to return to a small, limited, Constitutional government, sound money (gold/silver), a balanced budget, a level playing field in capitalism (not the corrupt "crony capitalism" we now have). That won't happen under the GOP Establishment candidates, although it will slow down temporarily the degradation process. That also won't happen under Romney & most of the GOP candidates. The corruption will continue. The dismissing & ignoring of the Constitution will continue, but at a lesser extent. Renewing the Bush era tax cuts and avoiding a jump in tax rates next year, as well as stopping ObamaCare implementation & its new taxes would be a step in the right direction. But don't hope for much else by the GOP Establishment. They really are just looking out for themselves, their elections & re-elelections regardless for the expense to America & our Constitution. I expect they will also return to pork barrel spending to help "buy" votes for their re-election in 2-4 years.

      We need 3rd Party or non-Establishmnment truly Conservative, Constitution-loving candidates elected this time around. Even then, it might be too late! Financial Armageddon might already be unavoidable as our debt tops $16 Trillion soon.

      How dumb has the average American voter become to allow these political crooks to remain in office (both Ds & Rs)?

      Wake up America… but it may already be too late!

      • Francois says:

        Many American voters see the corruption on both sides and turned to Ron Paul only to have the Republican establisment expose their treasonous ways and fix the caucuses against him beginning in Iowa and Maine and continuing in Nevada, Louisiana, and elsewhere. We no longer have "fair and honest" elections thanks to both political parties and the criminals that govern and control them. God help us.

    5. Harley Spoon says:

      Tax Day in 2013 might feel like it did during the last year of the Reagan Administration…and you would tell your half witted devotees that if you were honest. Did the US survive that tax day? Yeah! Did it survive the 8 years of Bill Clinton after the 1993 tax increases? Yep, and in good fashion. If history had any relevance to you intellectual cripples, you'd tell that to the dimwits who gobble up every word of your Koch Brother's convoluted logic! Did the US survive the massive Bush unpaid for tax cuts, the massive and most expensive social program in US history (the unpaid for Bush/Delay Prescription Drug Act), the unpaid for Bush wars in Iraq and Afghanistan, the unpaid for Bush largess to Big Oil, big Agriculture and Big Drugs, etc.?? That remains to be seen, doesn't it??? Of course, you'd rather tell your retards the BIG LiE that Obama tripled the national debt when you know he didn't!! You tell them those lies because you know they are as gullible as a teenage girl when her boyfriend insists he loves her and will marry her if she gets pregnant!! The vital element in a democratic republic is an informed and educated electorate. The Heritage Foundation is antithetical to that!!

      • Bobbie says:

        you seem to be misinformed and a bigot to freedom.You hold all presidents previous accountable, but refuse to see the acts of this President endangering freedom! You said yourself "the vital element in a democratic republic is an informed and educated electorate?" well, where does that put you when you select information that doesn't advocate the whole truth? When you accept an administration that pleads the 5th? Bummer. You give harley a bad name…

      • FedupW/liberalliar says:

        And your "intellectual acumen" and your "Obama Kool-Aid drinking drivel" are antithetical to common sense.

      • Francois says:

        Harley, you are truly a thoroughly brainwashed lefty……let me introduce YOU to the truth……if you actually care to confront it (which is quite doubtful).

    6. Harley Spoon says:

      I hold out no hope that anything resembling documentable and verifiable facts will be allowed on this blog!

    7. Caligirl says:

      Is it time to vote?? I cant wait till this clown is out of office!

    8. KC-NM says:

      The real surprise is that both republicans and democrats cannot seem to work together and completely re-do the tax system. We Americans know it is broken and so do the rich folks in Washington who are supposedly leading this country. The flat tax idea still makes sense – no deductions, no exclusions, no loop holes – simple process based on income and a flat percent of the income that is paid. Everyone has skin in the game, and for Obama – it is "fair". The stupid Buffet idea for tax was not successful in the Senate – thank God! Instead of these dumb ideas – get rid of the entire tax system and build one that is equitable and fair!

    9. Jeanne Stotler says:

      I don't think many of us would object to paying more taxes IF it was going to LOWER the deficit, BUT we know with BHO and his cronies only want to spend, Like my mother used t say when we had money as a kid, "It burns a hole in his pocket" We need to not trim goverment but do a serious cut back, audits of all agencies, starting with the WH and al the csars and Michelle's 20+ asst's. Limit the staff of congress, limit amount paid for a home state office an workers. Then eliminate soom bureaus that are obsolete, trim all employees by offereing early retirement to tose within 18 mos. of Retiring. Gov't . hashad way too many employees since the end of WWII and keeps getting larger with more duplication and spending more just because it's alloted.

    10. will says:

      Let's do the math on the taxing/spending rhetoric. In 2010, the top 1% (>$380,000 AGI) filed 1.4 million federal returns and paid 38% of the federal tax revenue. To eliminate the 2012 budgeted spending deficit of $1.3 trillion, the 1%ers would each need to pay additional taxes of $352,000 to pay their "Fair Share" which is $494,000,000. We clearly have more than a taxing problem.

      Let's set a goal of moving, over ten years, to a budget of 20-21% of GDP, cutting expenses as intelligently as possible to that number, and raising taxes as fairly as possible to that number.

    11. apilee says:

      democrat definition of rich = anyone with a job!

    12. Moose says:

      It won't be long now that we will be working all year to support the government. In that case we might as well join it and start letting them support us like they do 48% of the population now. Many are leaving high tax states like California to avoid corrupt government; pretty soon they'll be leaving the USA.

    13. Bobbie says:

      and what tax day should feel like if it were fair is fair tax everyone in this country should be contributing to. 1% of everyone populating this country from income at all levels, no deductions!

      • mike says:

        Everyone pays 1%? Sign me up. Is impossible and stupid, even the most math challenged, know that!

    14. Lisa Chambers says:

      Our currrent tax code started out as a flat tax and grew to what we have now. Changing to the FairTax would be a better solution.

    15. Jill Maine says:

      What's up with this likablitly contest I keep hearing about. I don't like anyone who turns America into a tyrannical state. I do not like BHO and I do not like the dems in Congress. They are nothing but communists.

    16. toledofan says:

      Here's how today feels to me; I'm 61 and have been working since I was 11, I'm not complaining; I sent three kids through school starting in Catholic grade schools through college, worked and saved to do this, I'm not complaining because it was my choice, paid for three weddings, again, I not complaining, I knew that came with having kids, and early on we decided that my wife would be a stay at home mom, again, that was our choice. After 30 years I retired and that was my choice, health reasons, but soon because of the market crash I had to go back to work, my 401K was decimated by $60K. So, today, because of my pension and what I make working full time, about 68K per year, no a millionare by no means, because the I didn't have at least 15% deducted to cover all taxes, I have to take out a loan to cover the bill. So, how do you think that makes me feel? Not very good and actually pretty mad at those that don't work, pay taxes and get everything for free. Something is really wrong wirth this picture.

      • SilliusBuns says:

        "Oh no, I ONLY make $68,000 per year! I'm not COMPLAINING!"

        My parents both work full time and pull in MAYBE $45,000 together and are struggling to put me through school. You make 68k with an empty nest and you're about to have SS/Medicare kick in, and need to take out a LOAN to cover your expenses? Try tightening your belt.

      • will says:

        God Bless You. I think this may be how you feel:
        SHOULDN'T YOU HAVE TO
        PASS A URINE TEST
        TO COLLECT A WELFARE CHECK
        … SINCE I HAVE TO PASS
        ONE TO EARN IT FOR YOU
        Let's pray that everyone who has played by the rules as you have
        will get out to vote.

    17. Blair Franconia, NH says:

      Not good. All the more reason to pass the 28th Amendment and get rid of the Infernal Revenue Service.

    18. The problem is the cuts are expiring. Remember that 300 billion in cuts came from the failed stimulus package? The reason they are expiring is because congress will not renew them, not the president. The congress is run by our own Republican party, so the fault lies not with the president, but the house of Reps. If you do not like taxes on lower income earners then I suggest voting Democrat, but do not forget the real cause of this "Taxageddon."

      New taxes are bad, but this is not a new tax. This is the expiration of tax cuts put in place when Democrats controlled congress, so the failure to renew is ultimately the fault of Republicans, and by extension those who voted for them. (Your fault.)

      • Bobbie says:

        ever work with a boss that's non compliant to reason? ever work with a boss that uses time to exploit skin color preference and your's is not preferred? ever work with a boss that has an attitude problem and works in contrast of everything productive? Probably not, because the private sector uses their own financing in respect of their self governing independence and those they hire to conduct the business, budgeting their own finances within their means!

    19. Blair Franconia, NH says:

      Only in Washington.

    20. RennyG says:

      We know the end is comming, we know the date, the time, the year. What more do we need?? Why isn't congress/republicans starting the movement now???? Or are we going to wait untill the evening before deadline and wait for "him" to buy votes??? We all know the routine!!! Start it now, let the press (some) publicize it early in terms of what we, republicans, are trying to do for the country. Where are ou leaders?? Let's go forward, not wait to have to defend our self!! Lets get the ball rolling, the clock is ticking!!!!
      SET'S PRAY IF YOU CAN'T DO ANYTHING!!! "HE CAN!!!"

    21. Whicket says:

      It seems that the Goal is to destroy the country- you REALLY don't expect them to stop it, do you?

    22. SilliusBuns says:

      Ah yes! Let's go back to good ol' 1900! No taxes! Also, no Social Security, no Medicare, no Medicaid, no food stamps, no EPA, no FDA, no SEC, no FBI, no CIA, no FAA (in fact no airplanes), no FCC, no FHA (in fact, no highways), insufficient labor laws, a small military, and an isolationist foreign policy. You know, just to name a few of the things that made 1900 the best time to be an American ;)

    23. Bob Marshall says:

      Under ObamaCare 159 programs were created. Guess who is paying for these programs?

    24. LukeAppling says:

      Again Obnama has set up Onamacare, Dodd/Frank and many other tax credits that will all begin in 2013 oddly Obama planned that date praying he would be reelected just prior. Only a sneaky individual would plot this to fall as it does. Hopefully we dump Obama but if we do the government will be in a gigantic mess of bills due and Obama on trhe way out so they will tell everyone how inept Romney is because the government will come to a near standstill when all these taxes come due and that is only two months after the Obama ouster.Thinjk back to the 60's radicals and their childish games they planned and it is the same.
      When the Clintons left office they removed all the W's from the computers to mock George Bush and cause a temporay problem-childish but expected from democrats.

    25. Jim Smith says:

      You are careful to specify that the tax total includes state and local as well as federal but then
      quickly assert that the $ go to "Uncle Sam" and talk exclusivly about federal taxes.
      This is disingenuous at best and one suspects that this verbal sleight-of-hand is deliberate,
      a calculated obfuscation designed to inflame the passions of those who don't pay all that
      much attention. "Uncle Sam" does NOT get my state or local tax $.

    26. Ralph says:

      Understanding the cause of economic booms/busts, and taxes is best for targeting a solution. Here is an effective way to increase understanding of economic booms/busts, and taxes, and to share with others as well: http://myselfsufficientplan.com/video-site-the-am

    27. Great Gran says:

      Consumption tax rather than income tax would be "fair share" and tax the underground economy. Wealthy (?) spend more therefore pay more. Those paid in cash to avoid record of income would have to pay when they spend. However, knowing Washington, that would be increased so they could spend more. As it is we borrow more to pay interest thereby increasing loan amount so more interest to pay so borrow more to pay increased interest ad infinitum. Anybody out there or in DC know basic math?

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