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  • Morning Bell: The Specter of Taxmageddon Rises

    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

    >>> See the infographic.

    And if that isn’t scary enough, the nonpartisan Congressional Budget Office has forecasted another 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.

    Quick Hits:

    • At least 55 people across the eastern United States were killed in Hurricane Sandy. All the tunnels going into New York City were flooded. New York is assessing the damage this morning.
    • Hurricane Sandy grounded more than 18,000 flights in the U.S. and around the world, stranding travelers. Many have restarted, but the reopening of New York airports is still uncertain.
    • Disney has bought Lucasfilm Ltd. and will make new Star Wars movies, beginning in 2015.
    • Could Hurricane Sandy delay the presidential election? Heritage’s Marion Smith examines the question.
    • Tune in online to the Istook Live! radio show, broadcasting from The Heritage Foundation from 9 a.m.-noon ET, as Ernest Istook talks Hurricane Sandy and the Benghazi information cover-up.
    Posted in Obamacare [slideshow_deploy]

    21 Responses to Morning Bell: The Specter of Taxmageddon Rises

    1. AZ Border Dude says:

      We can thank Nevada for returning Harry Reid to the Senate.

      • Joe in NV says:

        Most of us don't vote for him. He keeps promising Culinary Union Workers that he is the only thing that keeps their jobs for them, and then they get a flyer from the Union Bosses telling them to vote Democrat.

    2. Joe Ammons says:

      It is sad that people only vote based on Party affiliation. This election is not about voting for your Party, it is about voting for your country. Bush spent too much money which started the roller coaster downward in the economy, but the current administration spent twice as much in 1/2 the time. The Fed is printing money every day. The more printed money in the economy, hgher prices are charged for products and services. Wtiht the looming tax increases coming January 1 and the hidden taxes in Obamacare, more money will be paid to the Federal Government and less into the private sector. This does not encourage growth. The House has tried to pass relief on to the American people but the current Administration and the Senate will not work with the House. Don't vote for a Party this year, vote for what is best for your country. More Governement control over your life or freedom of choice for you and future generations.

      • sdfultz says:

        Joe,
        Mathematically speaking, what's best for America is that We the People face our debt. We should pay more taxes IF we can be assured that it goes specifically to pay the debt, just like any family would have to do to pay off a debt.
        It's time to let the blame be behind us and press on to a solution, or all we'll do is talk, talk, talk!

        • Lloyd Scallan says:

          What about cut spending that got us into this mess?

        • Wayne Peterkin says:

          That is NOT what is being proposed. Those taxes can and will be spent however our politicians wish.There is no "lockbox" that guarantees the new taxes will be spent of deficit reduction and even if there were, the amount of those taxes on the "wealthy" are not enough to make much impact and will hurt job creation. The debt needs faced for sure, but real reductions in non-defense spending are required as well as real entitlement reform. Higher tax rates damage the economy usually resulting in lower tax revenues.

          • muskegonlibertarian says:

            Having run a small business, I feel it necessary to point out that your "customers" are the "job creators". They are the ones that make it possible to hire people. Unless you have customers, you aren't going to be hiring anyone because without customers, you can't afford to hire people. As for these "pass through" businesses, that is a poor way of doing things today. Incorporation is the way to go. With incorporation your own personal taxes will depend upon what you pay yourself, not what amount of business you are doing. Yes, the accounting is a bit more difficult, but anyone running a business should be using a professional tax accountant for their taxes. Not outfits like H&R Block, or other "tax preparers" Discovered this the hard way that it is worth the extra money to have your taxes done by someone who really knows what they are doing. As for the increase in taxes, we're really talking going back to the tax rates we had back in 2000 under Clinton. Nor was the "payroll tax cut" a good idea as it only shortened the time before Social Security and Medicare get into "trouble". I do think that it was a mistake to "bail out" the banking industry when there was so much "fraud" being done that prosecuting those responsible should have been done first. There are an awful lot of "white collar" criminals who should be serving time in a federal prison somewhere as an example to others not to do these sort of things. Nor do I see Romney/Ryan as being an improvement over our present administration when all either political party is willing to do is "make government more intrusive" in our lives. We need to seriously "shrink" government than make it still yet larger!

        • Bobbie says:

          …tax exempt eh, sdfultz?

          We the people have no control over the debt. People that cause it rightfully face it! How about disciplining the ones that do have control to widen their narrow, overpaid minds ability to grasp their own circumstances their abuse of authority and abuse on society, costs society?

      • Stan Lawson says:

        The government that governs the least, governs the best…T. Jefferson

      • concernedjoy says:

        But when each Party refuses to work with each other, there is no choice but to pick the party that you feel has the country's best interest at heart. From what I observe, the Democrats want more control over your life, and the Republicans want freedom of choice for you and future generations. Pick a party.

        • Detah says:

          You are correct in your definition of Republicans. And it is true that Democrats want more control over your life. Unfortunately, Democrats and those who support Democrats, do not see themselves that way. They see themselves as sympathetic to the poor. They truly believe that government-compelled taxation and redistribution is equivalent to Charity. They live outside Reality. Not only do they have this false sense of Charity, but they also do not understand basic economic principles. One of the most basic economic principles is that individual's can maximize their own utility better than someone else can. That is, when a private citizen spends $1, they can get more value out of it, than the government can by spending that same $1. Democrats strictly believe that governments can spend money better than individuals. Given that basic economic principle, it is obvious that we should assign the smallest amount of money possible to government, so that it can still perform its required duties. That brings me to the final error in the Democratic ideology. They believe that government should provide thousands of programs to support poor people, young people, education, old people, minorities, immigrants, foreigners, etc. While some of these programs may be noble, they are not the function of government. One need not look very far to find the handful of functions that government is supposed to provide. In fact, they are compactly and concisely written down in a little document called The Constitution. Democrats reject this. So when you make your logical argument that people should 'pick a party', you have missed the point that these are not rational people making a rational decision. The fact is these Democrats are irrational, disassociative, economics challenged, Constitution-denying people who live in another Reality. We need to break them of all those bad habits and conditions before you will reach them with a rational argument.

    3. pete says:

      I agree that most of us that are employed would not mind paying a little more if and only if it went to pay down the debt. However, I am not willing to do that unless they have a budget, the increase in taxes goes to the debt reduction, and they actually follow the budget plan. No democrate has ever pushed for a reduced budget that means less handouts, less government intervention into the economy, less government employees, less borrowing, etc in my life time. It is always spend, spend, spend and never live within our means/be responsible. I am sick of footing the bill for this poor behavior.

      • Bobbie says:

        it's the principle of the matter and the wrong of the matter is government corruption in control. Had we had honorable leadership who respects America(ns) to take responsibility to avoid these matters beyond our own and follow a budget their job description requires, America wouldn't be here with an overbearing government leading us into further costs to continue the growth and or expand further government for only reasons of condescending America(ns.) Everywhere government puts themselves is where we the people freely did it for ourselves now losing that freedom at a high cost to everyone! Nobody deserves control within the behavior of lesser men…

    4. Lloyd Scallan says:

      The one fact that we must face is that Obama and his Dems lackeys in Congress would rather see this nation's economical system completely collapse before they allow any saving legistatition to pass without massive tax increases on the American people (including the middle class). And yes Amy, it not all of "Congress", it the Democrats. But have no fear, the gutless Republicans will bend over.

      • muskegonlibertarian says:

        Part of the reason we are in the trouble we are in is that far too much of our money is being spent upon an health care system that is at least 50% more expensive than it needs to be. No other country on Earth is spending the money we spend on health care. Unfortunately our health statistics don't justify what we are spending. The solution to this is NOT Obamacare. The solution is to free health care from the dead weight that it now suffers from being almost a monopoly from A to Z. Repeal of prescription laws is the first step in reducing the cost of health care. In my own case this would save $400 a year now being wasted on completely unnecessary office visits and lab tests. As it is, the only one doing "anything" to reduce the cost of health care happens to be Walmart and Sam's Club with their $10 for 90 days supply of common generics. This is prime example of how the free market reduces prices. Allowing the free market to truly operate in health care would bring down prices even further. Of course the medical profession views it differently. Monopoly pricing gives the profession the sort of incomes to live the kind of lives that people used to live before the government got so involved in the economy. We've pretty much gotten rid of labor unions except in government and the professions where professional organizations operate much like unions do. The AMA does for doctors what the UAW does for auto workers, but the AMA has more political power today than the UAW does. This is why US doctors are the world's highest paid by a considerable margin. What our hospitals are the world's most expensive by an even larger margin. And the profits made by our drug companies puts the oil companies to shame when calculated on a basis of return on investment…

    5. Wayne Peterkin says:

      The reality is simple. If Romney wins AND the Republicans take control of the Senate away from Harry Reid, this disaster will be fixed as soon as the new Congress is seated. If Obama wins OR the Senate remains controlled by Harry Reid, it may be fixed IF the Republicans in the House agree to some tax increases. If the impending disaster is NOT fixed, the Republicnas will be blamed because they did not support tax increases, and the media will agree with that assessment. This entire debacle has nothing to do with the debt because Obama's desired tax increase is not enough to significantly impact the deficits. It's all about wanting to increase taxes on someone without any significant spending cuts except to defense. More bad policy while blaming someone else.

    6. Juan Martinez says:

      If it takes"taxamageddon" to get our nation to stop living on credit, then that's a good thing. The republicans are right: we need to pay down our debt and reduce spending. The democrats are right: we need to raise taxes. As far as I can see, "taxamaggedon" + sequestration equals exactly that: higher taxes AND lower spending. If that is what it takes, then so be it.

      • concernedjoy says:

        But do you really think if the government raises taxes, they'll agree to lower spending? I don't think so. Just more for their pet projects. Since the government has wasted so much of the taxpayers money, I think they should prove they can cut back and cut out the pork before they start asking for even more of our money.

    7. Jeanne Stotler says:

      There was not 9/11 or Katrina under Obama, If these had not happened we would not have had the debt under Bush, promising your supporters goverment funds is not paramount to what happened when the planes hit the World TradeCenter or the Pentegon. investigtions show millions went to companies that CEO's supported Obama, look Solaryna (sic sp). We will take in more taxes by encouragng more busnesses, compitative corporate taxes, which will open jobs. Taxing businesses for nit picking reasons,lowers hiring increases unemployment, look at Obamacare, 50 or more employees will cost so limit emplyees to 49 even though you need 55, workers over 30 hgours a week need to e covered, solution , no one works more than 29 hours, see the problem??.and pattern

    8. Ben C. says:

      For me it's the amouont of personal energy I have left to fight the good fight. If Obama wins and the union proposals pass in Michigan I have told my employees I will be selling the business and moving to a "red" state where the business climate is friendlier. I have discussed this with other business ownes and they agree. I have owned a business for 40 plus years and experienced too much government intervention at all levels. I am tired of supporting those who feel entitled to government handouts. I will down size and let the younger people learn the hard way lessons I have learned.

    9. Candidate Obama gave a speech years before running for office about how he would build a voting coalition. You think Obama cares about high unemployment and welfare? No, because that IS his voting coalition. A poor economy means more government dependency, more dependency means more voters (in Obamas view anyway). I totally reject the notion that we need to pay more taxes. The federal government will never pay down the debt, instead, it will waste even more of our money until we reverse the cycle and elect representatives who will get the job done.

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