The largest tax hike in American historyArticle added by Karlan Tucker on July 20, 2010
Ranked: #24 (1,940 pts)
The increase in taxes will be so dramatic that Nancy Pelosi has prevented the 2011 federal budget from being discussed on the floor of Congress for fear the public will then realize how onerous the tax hikes are going to be and revolt in their voting this November.
In fact, Pelosi is making history by not allowing a discussion or vote on a 2011 budget, thus taxing and spending in 2011 without an official budget. How bad are taxes going to be? Well, if they aren't already, they will soon become your single largest expense in life. How would you feel if out of every dollar you earned, 50 cents or more were taken from you?
We are taxed in so many areas that we forget how big an impact it is having on us. Consider some of the ways money is taken from us:
Did you know that if LeBron James had accepted the offer to play for the New York Knicks, he would have had to pay $12 million in New York state taxes, but by going to Miami and benefiting by a state that has no state income tax, he saved $12 million?
- Federal income tax
- State income tax
- City taxes
- County taxes
- Property taxes
- Sports stadium taxes
- Public transportation taxes for light rail, subway, bridges, etc.
- Airport taxes
- Sales taxes
- Gasoline taxes
- Withholding from your paycheck for Medicare/Medicaid/Social Security
- Toll road taxes
- License plate taxes
- Hotel taxes
- Car rental taxes
- Behavior taxes on cigarettes, etc.
Recently on a television home show, a couple purchased a condo in New York City for $2 million. Their property tax will be $200,000 annually. That means even if they pay cash for the property, they will have to come up with $16,666.00 monthly just to pay property taxes.
I personally know of a company that just moved from Texas to Switzerland to avoid the tax hikes coming on January 1, 2011.
In Sweden, the country takes care of many of its citizens needs, from cradle to grave. As a result, they have one of the highest tax rates in the world. And guess what? They also have the highest absenteeism rate from work. Who wants to work when almost all of it is taken from you?
Margaret Thatcher got it right when she said, "Socialism always fails because eventually it runs out of other people's money."
Back to America... I hope you feel like you have had money burning a hole in your pocket, because Uncle Sam is going to help you with that problem.
Here what's coming in less than 165 days: Remember the promises from our current president that no one making less than $250,000 will get a tax increase? Well, he must have forgotten he said that.
Itemized deductions and personal exemptions will be phased out, which is the same thing as raising taxes even higher than just the effect of the above bracket increases.
- Currently all federal tax brackets will be hit:
- The 10 percent bracket will rise to 15 percent
- The 25 percent bracket will rise to 28 percent
- The 28 percent bracket will rise to 31 percent
- The 33 percent bracket will rise to 36 percent
- The 35 percent bracket will rise to 39.6 percent
The estate tax exemption will be $1 million, and the top bracket for the death tax will be 55 percent.
Capital gains will rise from 15 percent to 20 percent .
The dividend tax when stock is held for less than one year goes from 15 percent to 39.6 percent. This will then rise another 3.8 percent, to 43.4 percent in 2013.
Obamacare will add over 20 new taxes, the first to go into effect on January 1.
Health savings accounts will no longer be available, nor will flexible spending accounts or health reimbursement accounts.
Typically, businesses expense their purchases of equipment to effectively reduce their income by the same amount to save on taxes. Not any longer. Now, we have to depreciate our equipment purchases, thus another tax increase.
The Alternative Minimum Tax will ensnare a projected 28 million families, up from four million last year.
Charitable giving from IRAs will no longer be allowed.
What will our government do with all this additional revenue? Spend it, of course.
Obamacare is projected to save $140 billion 10 ten years. However, on June 30th, our Congress spent a record $166 billion in one day, wiping out the supposed 10 years of savings that nationalizing our health care system is supposed to create.
Taxing us to death is not the answer. Somehow our government has to learn restraint. They have to stop spending. In a good economy, taxes bring in $2.5 trillion per year. However, our government is spending $3.5 trillion plus annually. As of May 2009, 46 cents of every dollar spent by our government is being borrowed. I was sitting in the audience when the President of the Federal Reserve Bank of Kansas City, Tom Hoenig, said that just to meet the future promises of Medicare, Medicaid and Social Security, we would have to have a marginal tax rate of 80 percent.
I believe we have to stop the spending spree and lower taxes, thereby creating the environment for a healthy economy. Don't worry if you don't agree with me; it isn't going to happen. Our politicians are out of control.
So, how do you use this information to increase your appointments and sales?
Most have no idea of the massive tax burden that is coming in just a few months. If you are knowledgeable about tax planning, you have an opportunity to see clients now to help them reduce the impact of the increases.
All of us can use tools like tax-deferred annuities, Roth conversions and indexed universal life to minimize, defer or eliminate the impact of many of these taxes, even creating tax-free income in retirement.
People need solutions when they have a problem. Now all you have to do is show them how big their problem is to motivate them to see you; then solve their problems with the aforementioned tools.
Certainly, the largest tax increase in American history is reason enough to go see every client and prospect you have ever seen. Then, educate them about what's happening and motivate them to take action with your tools and recommendations.
Don't just educate though, because people make few decisions based on education alone. You have to motivate them to take action now. After all, these huge tax increases are only bad news if you do nothing about them. Use this news to move your fence-straddlers, along with everyone else.
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