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‘Taxmageddon’: $500 Billion Tax Increase Approaching

A wave of tax hikes will hit American taxpayers early next year.

, 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.

“It would also result in 83 percent of U.S. households facing an average $3,701 in tax increases, according to the Tax Policy Center,” Business Week reported.

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.

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BThompson August 01, 2012 at 05:47 PM
A layman middle class independent perspective: U.S. politics and taxes has always been a muddy affair. However, after reviewing the evidence I have determined to be reliable, I have determined that President Obama’s policies would most likely increase my taxes about $400 or about $33 per month. Under policies of those that have been proposed by people like those who control the House of Representatives, my taxes will increase by about $600 or about $50 per month. So, the difference to me between the two proposed sets of policies is about $17 per month. Get real are we really arguing about a difference of $17 per month. This issue is a red heron in my opinion.
Jacqualea Morrison Cooley December 31, 2012 at 07:19 PM
No doubt at all where your vote win? Did you really vote for this joker twice?
Jacqualea Morrison Cooley December 31, 2012 at 07:22 PM
..and who do you suppose will suffer when the people over $250,000 suffer. It trickles down. And who do you thin will pick up the extra taxes on the various health industries. And who do you think will suffer when research companies are taxed? Get you head out of the clouds.
Jacqualea Morrison Cooley December 31, 2012 at 07:24 PM
I sure would like to see your complete analysis because I am sure you did not figure in how the health industry taxes will affect you, nor how the extra taxes on those above you will affect you,
Mr. B December 31, 2012 at 07:26 PM
Don't be so naive Brian. Read the bill. There are tons of tax increases in the bill, many that have nothing to do with healthcare. I listed many of them here on a previous thread.

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