Americans may be slammed by shocking tax hike

How the Expiring Bush Tax Cuts Affect You –  A brief summary of some of the biggest changes we will be facing next year if our rulers don’t do anything to extend the current tax rates.  If they don’t act soon, the end of this year is going to be very busy with tax planning and income shifting strategies.

Moonbats wing it when it comes to paying more taxes – What a shocker. The people of Taxachussets aren’t wildly accepting the opportunity to voluntarily pay a higher tax rate.

For those wanting to see a lot more detail on the new taxes just authorized by the socialized medicine scheme, here is a 161 page pdf from the Joint Committee on Taxation.

As pointed out by Daniel Foster in NRO’s The Corner, some of the new taxes were set up without the proper enforcement mechanism to ensure compliance by the subjects of our imperial Congress, who in typical royal fashion, have exempted themselves and their staffs from these new laws.

Unfortunately, since there are still a few years until some of these new taxes kick in, there is plenty of time for those missing pieces of the puzzle to be added to the scheme by our rulers who believe it is their purpose in life to micro-manage every aspect of our lives.

A handy chart of effective dates from TaxCoach:

(Click on image for full size)

There’s no doubt that we will be analyzing the new taxes created by the DemonRats in their evil socialized medicine scheme for decades.

Being buried in tax season work, I don’t have time to pore over the actual legislation. Of course, neither did anyone in Congress who voted for it; but they live on a different planet than we mere mortals inhabit.

I was grateful to receive the first of what I am assuming will be many analyses of this latest tax legislation from the good folks at TaxCoach.

Subject Line: Washington Reforms Health Care And Taxes

Sunday’s night’s health care bill will go down as one of those once-in-a-generation accomplishments. I’m not here to debate the merits of the bill – historians will still be doing that decades from now. But it’s important to point out some important tax changes included in the bill and the companion “reconciliation” bill now before the Senate. (Just how important are they? Well, the Congressional Budget Office says the IRS will need $10 billion and 17,000 new employees to enforce its share of the new rules!)

Here are some of the key tax provisions:

* Starting immediately, certain small businesses with less than 10 employees will get a 35% credit for the cost of providing employee health benefits.

* Starting in 2011, employers will have to report the value of health benefits on Form W2.

* The penalty tax for Health Savings Account distributions not used for health care expenses doubles from 10% to 20%. This will discourage using HSAs for supplemental retirement savings.

* Starting in 2013, the 7.5% floor for deducting medical and dental expenses climbs to 10% (unless you or your spouse are 65 or older, in which case it remains at 7.5% until 2016).

* Healthcare flexible spending account contributions are capped at $2,500 per year.

* Starting in 2014, businesses with more than 50 employees will have to offer heath benefits or pay a penalty of $750/employee.

The reconciliation bill includes one more unwelcome surprise. Currently, the Medicare tax is limited to 2.9% of earned income. The reconciliation bill imposes an additional Medicare tax of 0.9% on earned income above $200,000 (individuals) or $250,000 (families). It also adds a 3.8% “Unearned Income Medicare Contribution” on investment income – specifically, interest, dividends, annuities, royalties, capital gains, and rents – for taxpayers with Adjusted Gross Income above those same thresholds. Those new levies would take effect in 2013.

The complete bill is 1,018 pages, so it’s going to take some time to analyze. But we’ll be paying close attention as details become available. In the meantime, call us with any questions!

It’s good to see that some of the new taxes aren’t scheduled to take effect for a few more years; giving us time to plan for how to avoid or minimize them. I’m sure TaxCoach will be including a lot of tips on how to deal with these new taxes in their future updates.

Update: You can download an eight page pdf file with more detailed analysis of the new taxes from CCH.