I received a forwarded email about the various ways Obama is increasing taxes on all the people he said he wouldn't raise taxes on, and I'm curious if someone who actually knows something about the details of this stuff could confirm or refute any of it. Some of this is from not getting the Bush tax cuts renewed, but some of it is just plain new taxes, even on some things never taxed before.
According to the email, the inheritance tax, called by its opponents the death tax (which I think is an apt name, because you're basically being taxed for dying and ceding your money to your heirs) is returning in full force. I pretty much knew that already. I didn't know any of the other things (assuming they're true).
I'm not surprised to see the top tax rate increasing from 35% to almost 40%. But increasing the lowest rate from 10% to 15%? Surely there are people who make less than $200,000 a year who are in the lowest tax bracket. In fact, many people in the lowest tax bracket struggle to make ends meet and now are being expected to carry even more of the load, something that goes against the tax philosophy of both the Republican and Democratic parties. If the current president and congressional leadership are behind tax increases for the poor, then it's almost fair to say that Obama and company are inviting the tea party to unseat the Democratic congressional leadership, even aside from his campaign promises not to raise taxes for anyone earning under $200,000 and their repeated insistence that the stimulus package could be paid for without increasing taxes.
Another item is that the so-called marriage penalty is returning. You basically pay higher taxes for being married, in effect, at least if certain conditions are also true, since there are a couple things that in some cases counterbalance the marriage penalty (e.g. if only one spouse receive income, the spouse with no income significantly lowers the taxes of the working spouse, but the conditions where the marriage penalty increases the taxes of a couple are common enough, as I understand it).
The child tax credit is being halved.
Dependent care and adoption tax credits are being removed.
Tax-free accounts for medical care or special needs children will be removed or significantly diminished. The special needs trusts we're planning to get for the boys will be capped off at $2500. According to the email I received, this will be especially cruel and onerous for parents of special needs children. We're in fact pursuing getting accounts for the boys so we can earmark tax-free money that won't count against them for qualifying for SSI.
The alternative minimum tax is expected to kick in for 28 million families next year instead of the 4 million who had to pay it last year. These are people who didn't make enough money to pay any taxes last year. In other words, it's a tax on the poor. I've seen bi-partisan complaints about this tax, insisting that it simply be removed, and yet somehow they've snuck in provisions to expand it sevenfold?
There are lots of tax hikes and removal of tax breaks on small businesses, not the big business Obama keeps saying he wants to "get" (all the while secretly giving them a lot of what they want).
Education deductions from tuition and fees will be removed, and student loan interest deductions are being cut.
You will no longer be able to pay money from and IRA to a charity and have it be a tax deduction.
Health insurance benefits paid by an employer are going to count as income and be taxable. This will be enough to bring many people up a tax bracket, but it will increase the gross income significantly even if it doesn't.
Now this is a forwarded email, so it's almost certain that not everything in it is correct, but I'm curious exactly which things are and which aren't and if I'm interpreting them correctly. I didn't expect he would even have a remote chance of keeping his campaign promises on taxes, and I never thought he intended to anyway, but this goes significantly beyond what I expected. If this is all correct, then President Obama is just asking for people who voted for him to complain that he betrayed them. His chances at another term would be nearly zero if the 2012 election were going to be in April instead of November. This may not turn out to affect the 2010 elections as much, since they conveniently delayed the effect until 2011 for most of these changes.