http://blog.heritage.org/20...are-the-taxmageddon/

quote Brace yourself. In a mere 271 days, you and your fellow Americans will be hit with a tax hike the likes of which this country has never seen. The Washington Post aptly called the unprecedented $494 billion tax hike “Taxmageddon,” and Federal Reserve Chairman Ben Bernanke described it as a “massive fiscal cliff.” Whatever your preferred imagery, it’s a really big deal. Despite all the warnings, President Barack Obama has kept his silence while Congress has made no apparent effort to prevent this impending calamity to families and the economy. The prevailing wisdom is that “something will get done” in a lame duck session of Congress after the election. But why wait? And why after the election? Here’s why you should be worried. For starters, remember that this is the same President who in 2009 promised, “if your family earns less than $250,000 a year, you will not see your taxes increased a single dime.” That’s a vow he’s broken, and in 2013, things are going to get even worse if this year Obama doesn’t lead and Congress doesn’t act. Katy, bar the door, there’s big trouble in store. The tax man won’t draw his billions from the American taxpayer with just one big needle — the massive tax increase will be the product of tax policies expiring in seven different categories, on top of five new Obamacare tax hikes taking effect. In a new paper, Taxmageddon: Massive Tax Increase Coming in 2013, Heritage’s Curtis Dubay details the tax hikes that will occur if President Obama and Congress do not act before the end of the year: Almost 34 percent of the tax increase from Taxmageddon comes from the expiration of the 2001 and 2003 Bush tax cuts. These cuts are best known for reducing marginal income tax rates, but they also reduced the marriage penalty, increased the Child Tax Credit and the adoption credit, and increased tax breaks for education costs and dependent care costs. Another 25 percent of Taxmageddon comes from the expiration of the once-temporary payroll tax cut. The expiration of the patch on the Alternative Minimum Tax (AMT) — which would raise the income threshold over which families qualify for the AMT to prevent middle-income families from paying this tax that is only supposed to impact “the rich” — accounts for 24 percent of the total potential 2013 tax increase. The balance of the tax hikes comes in part from new taxes under Obamacare, the expiration of tax cuts in the 2009 stimulus, the expiration of a group of policies known as “tax extenders,” changes in the current policy on the death tax (in 2013, it will rise from 35 percent today to 55 percent and the exemption will fall from $5 million to $3.5 million), and the expiration of businesses’ ability to fully expense new capital investments. This $494 billion in higher taxes will certainly hit families and business hard in 2013, but their effects are already being felt. Dubay explains that Americans must plan for tomorrow, and the tremendous uncertainty about tax policy makes the future much more uncertain, thus discouraging the investments and other actions needed to spur the economy to create jobs faster today. So while the President and Congress appear content to put off ’til the 11th hour what they can and should do today, those who will have to pay the higher tax burden are waiting to see what the future holds. Dubay says that this is “slowing job creation and stopping many of the millions of unemployed Americans from going back to work.” Early on in his presidency, Barack Obama said he knew about the impact of taxes. Back in 2009, on a visit to Elkhart, Indiana, Obama emphatically stated his belief that raising taxes in a recession is a bad idea. Though America is not in recession today, it still struggles with very high unemployment, and so the President’s logic applies with equal force — raising taxes is a drag on job creation. Unfortunately, in a speech in Washington on Tuesday, President Obama unabashedly revealed that preventing tax hikes is not his priority. In fact, he wants to see even more taxes imposed on the American people and on job creators all in the name of “fairness” — may of which are in his budget. That’s a political doctrine, not an economic policy, and it’s a proven recipe for economic disaster. If the President doesn’t work with Congress to take action soon to prevent a 2013 Taxmageddon, his brand of “fairness” will result in the biggest tax increase in the nation’s history. And that storm will wreak even more damage on America’s already fragile economy. Congress shouldn’t wait for Obama to take the lead in preventing a policy nightmare he might actually favor. Instead, it should act now to prevent these tax hikes from crushing America’s families and our economy.

I didn't read the entire article, but the House did try to extend the tax cuts for another year (or two?) last December, but the Senate blocked it in favor of the 2 month extension. Everything else is set to expire at the end of this year. Nothing will be done before election day because nobody cares if they don't get re-elected. Obama won't care either way since even if he is re-elected, he'll never have to face the voters again.

Let 'em expire. All of 'em.

quote Originally posted by maryjane: Let 'em expire. All of 'em.

Give the Dems enough rope to hang themselves?

quote Originally posted by maryjane: Let 'em expire. All of 'em.

Agreed. Cutting spending is not enough. We need to throw dirt in the hole if we are ever going to start filling it in.

quote Originally posted by WBailey1041: Give the Dems enough rope to hang themselves?

That too I suppose, but I want to see taxes increased A LOT and spending CUT a LOT.
Otherwise, we and our grandkids will be in a debt/deficit death spiral that makes Greece look like fiscal success.

quote Originally posted by KidO: Agreed. Cutting spending is not enough. We need to throw dirt in the hole if we are ever going to start filling it in.

It would help if they stopped digging.

quote Originally posted by maryjane: Let 'em expire. All of 'em.

I'm starting to get that feeling too. I will have less money but I won't be broke. Let those Bush era tax cuts expire and we will see who was really for the middle class and poor.

I never liked the payroll tax cut to begin with. It is a gimmick at best and does more harm than good IMO.

I don't think Obamacare will survive the Supreme Court review. But if it does, then it has to be paid for. One of the hardest lessons to teach a leftist is that nothing is free.

quote Originally posted by Formula88: It would help if they stopped digging.

No argument there, but we may differ in opinion on which hole they stop digging in first.

David Leonhardt, an economic columnist for the N.Y. Times wrote the following back in 2010, and I think it makes a clear example that cutting spending is not enough on it's own.

quote Let's face it -- a lot of the talk about the deficit ends up being pretty vague. Politicians want to cut spending, but they don't say which spending. They want fundamental tax reform, but they don't explain how that will bring down the deficit. So here's a little rule: If you want to be taken seriously when you rail against the deficit, you need to support one of the following four policies. Better yet, support more than one. Ready for the four? One, cuts to Medicare. Two, cuts to Social Security. Three, military cuts. Four, tax increases. Any budget expert will tell you that we simply cannot fix the deficit without doing at least one of those four. The Congressional Budget Office projects that by the year 2035, the annual deficit will be almost $2 trillion. Let's imagine that we make big cuts to every government program that's not our list of the big four -- bigger cuts than Ronald Reagan made -- to things like education and transportation. How much money might that save? Only about $100 billion. You can even double that figure and assume truly radical cuts. Even then you have saved a measly 10 percent of the projected deficit in the year 2035. The reason is that these programs make up only a modest share of government. The three biggest programs -- by far -- are Medicare, Social Security and the military. But we can do something about those programs. We can clamp down on Medicare spending that hasn't been shown to make people healthier. We can raise the retirement age for Social Security. We can reduce wasteful military spending; though, by itself, that won't be enough. And we can definitely raise taxes. As a share of GDP, taxes are now at their lowest level since 1951. What we cannot do is just wish the deficit away. We've promised ourselves more government that we've paid for, and that can't continue. So which of the big four do you choose?

I'm all for them expiring myself. They won't create any "new" taxes and I'll get a kick out of people's reactions after they expire.

I shake my head at the part about Obama breaking his promise not to raise taxes on people earning $250K or less by "one dime". How many times has he already broken that promise? 11 or is it 12? Can't recall all the increases. Maybe he just meant "one dime" literally. And people will actually vote for this guy a second time.

quote And people will actually vote for this guy a second time.

Only the dumb kool aide drunk ones.

We are already taxed enough. We don't have a tax problem. We have a spending problem. You could tax income 100%, and it would not be enough at the current spending rate.

I don't agree with ANY tax increases (or 'expiring' so-called tax cuts) until the spending problem is addressed FIRST. That means ZERO deficit. Then any additional taxing would be able to go towards actual DEBT REPAYMENT.

Won't happen, though. The 'smart kids' in charge don't see anything wrong with spending beyond the means to repay. Any additional revenue they get will be seen as another excuse to spend more.

I tend to take a longer view of things, and many of the Smart Kids and their rivals are only worried about the bottom line of the Smart Kids generation when they should be equally or more concerned with the Smart Kids' kids and their kids bottom line. We CANNOT get deficit under control with cuts alone, no matter how massive those cuts are nor can we get deficit under control with tax increases alone no matter how huge those increases are--both need to be what would be considered from a historical standpoint, as gigantic in nature, scope and size. Those who are only concerned about NOW and ask why it has to be done right now, are just kicking the can down the road to those who had nothing to do with either the spending or the tax rates. Those who claim cuts will slow down any recovery are doing exactly the same thing and are extremely short sighted IMO, as well as being more than a little selfish. Cut and tax equally deep, wide, and hard. Yep, it will hurt, but it is exactly what we need and deserve for our ridiculous spending/borrowing spree over the last 40 years. I'm just not much on making our problems the yet unborn or yet mature people's problems.

Our country has had a defecit since 1969! It's not going to be an easy fix. Cherrypicking elements of a solution is nothing more than political posturing. It is going to take a holisitc approach to fix the financial problems we have created. Cutting spending is only part of the whole. Eliminating tax cuts and loopholes is another. Alone neither will work. Together they have a chance.

[This message has been edited by KidO (edited 04-06-2012).]

Today's tax code is about social engineering, not collecting revenue. It is crafted to encourage certain activity and discourage others. That is why there are different tax rates and deductions.

If they want to just collect taxes, then eliminate ALL deductions and simplify the rates. If I were king the tax code would look like this:

10% tax on all income up to $100k/year
15% $100k-250k
20% 250k+

The income brackets would be inflation indexed to automatically increase/decrease each year.

Only personal income would be taxed. Any use of business assets would be considered income which includes company cars, company jets, company trips, company meals. If anyone receives any benefit, it is taxed as income.

All government benefits would also be taxed as income.

All investment gains would be considered income to be taxed when sold based on initial investment modified by inflation.

No corporate taxes.

The problem we have with taxes is that government will always find a way to spend more than it takes in. We have a huge waste of our tax money in agencies that shouldn't exist, duplication of effort, and people fleecing the government with some of the goods they sell them, etc. Here is one site with stories about government waste.
http://www.newser.com/tag/1...overnment-waste.html

[This message has been edited by avengador1 (edited 04-06-2012).]