, the path is now clear for 20 new related taxes to go into effect. Over the next 10 years, these new taxes will result in an additional tax burden of $500 billion.
These hikes, combined with several other upcoming tax hikes, are collectively referred to as “Taxmageddon” and will begin to hit American taxpayers in January of 2013.
According to a report in Business Week, the Congressional Budget Office fears the hikes along with planned spending cuts could send the economy back into recession.
Whether or not Congress and President Barack Obama will take action to avert what one economic forecaster referred to as a “fiscal cliff,” remains to be seen.
The following list, compiled by the organization, Americans for Tax Reform, is a list of tax hikes that are scheduled to go into effect on Jan. 1, 2013.
Higher taxes resulting from expiration of 2001 and 2003 tax relief measures:
- The top personal income tax rate will increase from 35 to 39.6 percent. The lowest rate will rise from 10 to 15 percent.
- The “marriage penalty” will return, reducing the standard deduction for married couples.
- The child tax credit will be halved from $1,000 to $500.
- The middle class death tax returns and will impose a 55 percent tax on estates valued over $1 million.
New taxes related to the implementation of Obamacare (Click here for the full list of Obamacare taxes – several have already gone into effect):
- The Obamacare investment surtax will result in the capital gains rate increasing from 15 to 23.8 percent in 2013 and the dividends tax will rise from 15 to 43.3 percent.
- The Medicare payroll tax will increase from 2.9 to 3.8 percent for all wages and profits exceeding $200,000 for individuals and $250,000 for married couples.
- Flexible Spending Accounts (FSAs) will be capped at $2,500. The Americans for Tax Reform notes this cap will be “particularly cruel and onerous” for parents of special needs children who currently take advantage of the unlimited FSA to fund special needs education expenses.
- A new medical device tax will impose a 2.3 percent excise tax on every medical device valued over $100.
- The threshold for medical itemized deductions will increase from expenses exceeding 7.5 percent of adjusted gross income to 10 percent of adjusted gross income.
Tax relief provisions related to the Alternative Minimum Tax (AMT) will increase the number of families paying the AMT from 4 to 31 million. Several tax benefits related to businesses, education and IRAs will also be eliminated or limited.
Are you worried about "Taxmageddon"? Do you think President Obama and Congress will act before the election to avoid at least of some of the proposed increase? Let us know in the comments.