Six Months to Go Until The Largest Tax Hikes in History

In just six months, the largest tax hikes in the history of America will take effect. They will hit families and small businesses in three great waves on January 1, 2011:

(N.B. This version of the document contains even more tax hikes than the original version did)

First Wave: Expiration of 2001 and 2003 Tax Relief

In 2001 and 2003, the GOP Congress enacted several tax cuts for investors, small business owners, and families. These will all expire on January 1, 2011:

Personal income tax rates will rise. The top income tax rate will rise from 35 to 39.6 percent (this is also the rate at which two-thirds of small business profits are taxed). The lowest rate will rise from 10 to 15 percent. All the rates in between will also rise. Itemized deductions and personal exemptions will again phase out, which has the same mathematical effect as higher marginal tax rates. The full list of marginal rate hikes is below:

- The 10% bracket rises to an expanded 15%
- The 25% bracket rises to 28%
- The 28% bracket rises to 31%
- The 33% bracket rises to 36%
- The 35% bracket rises to 39.6%

Higher taxes on marriage and family. The “marriage penalty” (narrower tax brackets for married couples) will return from the first dollar of income. The child tax credit will be cut in half from $1000 to $500 per child. The standard deduction will no longer be doubled for married couples relative to the single level. The dependent care and adoption tax credits will be cut.

The return of the Death Tax. This year, there is no death tax. For those dying on or after January 1 2011, there is a 55 percent top death tax rate on estates over $1 million. A person leaving behind two homes and a retirement account could easily pass along a death tax bill to their loved ones.

Higher tax rates on savers and investors. The capital gains tax will rise from 15 percent this year to 20 percent in 2011. The dividends tax will rise from 15 percent this year to 39.6 percent in 2011. These rates will rise another 3.8 percent in 2013.

Second Wave: Obamacare

There are over twenty new or higher taxes in Obamacare. Several will first go into effect on January 1, 2011. They include:

The Tanning Tax. This went into effect on July 1st of this year. It imposes a new, 10% excise tax on getting a tan at a tanning salon. There is no exemption for tanners making less than $250,000 per year.

The “Medicine Cabinet Tax” Thanks to Obamacare, Americans will no longer be able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin).

The HSA Withdrawal Tax Hike. This provision of Obamacare increases the additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent.

Brand Name Drug Tax. Starting next year, there will be a multi-billion dollar tax assessment imposed on name-brand drug manufacturers. This tax, like all excise taxes, will raise the price of medicine, hurting everyone.

Economic Substance Doctrine. The IRS is now empowered to disallow perfectly-legal tax deductions and maneuvers merely because it judges that the deduction or action lacks “economic substance.” This is obviously an arbitrary empowerment of IRS agents.

Employer Reporting of Health Insurance Costs on a W-2. This will start for W-2s in the 2011 tax year. While not a tax increase in itself, it makes it very easy for Congress to tax employer-provided healthcare benefits later.

Third Wave: The Alternative Minimum Tax and Employer Tax Hikes

When Americans prepare to file their tax returns in January of 2011, they’ll be in for a nasty surprise—the AMT won’t be held harmless, and many tax relief provisions will have expired. These major items include:

The AMT will ensnare over 28 million families, up from 4 million last year. According to the left-leaning Tax Policy Center, Congress’ failure to index the AMT will lead to an explosion of AMT taxpaying families—rising from 4 million last year to 28.5 million. These families will have to calculate their tax burdens twice, and pay taxes at the higher level. The AMT was created in 1969 to ensnare a handful of taxpayers.

Small business expensing will be slashed and 50% expensing will disappear. Small businesses can normally expense (rather than slowly-deduct, or “depreciate”) equipment purchases up to $250,000. This will be cut all the way down to $25,000. Larger businesses can expense half of their purchases of equipment. In January of 2011, all of it will have to be “depreciated.”

Taxes will be raised on all types of businesses. There are literally scores of tax hikes on business that will take place. The biggest is the loss of the “research and experimentation tax credit,” but there are many, many others. Combining high marginal tax rates with the loss of this tax relief will cost jobs.

Tax Benefits for Education and Teaching Reduced. The deduction for tuition and fees will not be available. Tax credits for education will be limited. Teachers will no longer be able to deduct classroom expenses. Coverdell Education Savings Accounts will be cut. Employer-provided educational assistance is curtailed. The student loan interest deduction will be disallowed for hundreds of thousands of families.

Charitable Contributions from IRAs no longer allowed. Under current law, a retired person with an IRA can contribute up to $100,000 per year directly to a charity from their IRA. This contribution also counts toward an annual “required minimum distribution.” This ability will no longer be there.

Obama US Attorney expected to stand behind federal gay marriage ban, plaintiffs say

White House declines comment;
Political implications could be enormous

The gay rights law group that convinced a federal district court judge Thursday to strike down a federal ban on gay marriage has told the New York Times they "fully expect" the Justice Department to appeal the decision -- a move that could shatter Obama's image in the gay community and cost his party millions of dollars in donations from gay donors.

"Lawyers on various sides of the issue said it was a certainty that the government will appeal and likely that the cases will reach the Supreme Court," Politico added Friday.

Such an appeal would be filed by the Obama-appointed US Attorney Carmen Milagros Ortiz, who was confirmed last November by the Senate.

In an email Friday, a White House spokesperson told Raw Story, "This is a question for the Justice Department."

"The only comment I have is the Department is reviewing the decision," Tracy Schmaler, a Justice Department spokesperson, told Raw Story shortly after.

Evan Wolfson, director of the gay rights group Freedom to Marry, said he doesn't know what the Justice Department will do, but hopes that if they appeal, they will couch their filing carefully.

"I think we're going to have to see what the Justice Department decides," Wolfson said. "I do hope that, if there is an appeal, that at a minimum the administration will agree that the appellate court should apply a presumption of unconstitutionality -- which in legal terms is called heightened scrutiny -- to this law that they concede is discriminatory."

"My message [to Obama] would be: Do the right thing," Wolfson added. "You agree this law is discriminatory. A highly respected conservative Republican-appointed judge has now said it's unconstitutional. Stop enforcing this unfair and discriminatory law that harms families and helps no one."

Woman who won Massachusetts marriage case expresses disappointment

Hillary Goodridge, one of seven couples that sued -- and won -- gay marriage rights in Massachusetts, expressed disappointment in a Friday morning phone call.

“I would find it very disheartening that they would choose that course of action," Goodridge told Raw Story. "I want to see the president and his administration committed to full marriage equality.”

On Thursday, Boston US District Court Judge Joseph Tauro struck down the so-called "Defense of Marriage Act," declaring it unconstitutional and asserting that gay and lesbian couples deserve the same federal benefits as straight couples.

Should the Justice Department decided to appeal the ruling, the political implications would likely be extreme. If they decide not to appeal the ruling, which would effectively mean that President Obama does not believe the federal government has a right to ban gay marriage, Republicans will have another weapon in their political arsenal during their fall House and Senate campaigns.

An appeal filed by an Obama-appointed US Attorney will enrage gay rights groups and their allies, who are already frustrated with what they see as inaction on Obama's behalf in not ending a federal law which forces the Pentagon to fire anyone who admits publicly that they are gay.

Congress recently voted to give the military the authority to end the practice. The military, however, says it is still "studying" the implications of allowing gays to serve. Obama lauded Congress' move, saying, "Our military is made up of the best and bravest men and women in our nation, and my greatest honor is leading them as Commander-in-Chief. This legislation will help make our Armed Forces even stronger and more inclusive by allowing gay and lesbian soldiers to serve honestly and with integrity."

Our military is made up of the best and bravest men and women in our nation, and my greatest honor is leading them as Commander-in-Chief. This legislation will help make our Armed Forces even stronger and more inclusive by allowing gay and lesbian soldiers to serve honestly and with integrity."

Several hundred gay and lesbian servicemembers have been fired under the law since President Obama took office. Aside from the loss of US servicemembers' jobs during a war, a recent estimate by the University of California also found that the law has cost $363.8 million over 10 years, partly as a result of the fact the Defense Department has been forced to train new hires to replace those they have terminated.

Goodridge, whp says she voted for Obama, said she will be upset if his Administration "fails to deliver" on gay equality.

“I did vote for him and I will be very angry if his administration continues to stall or actively block the equality of men and women serving in the Armed Forces, married gay men and lesbians, LGBT communities and our families," Goodridge said. "It is past time for this administration to demonstrate their commitment to us, to all Americans."

US Attorney managing case known for public service career

Obama-appointed US Attorney Carmen Milagros Ortiz spent much of her career in public service prior to taking her current job, according to her bio on the Justice Department's Web site.

"Ms. Ortiz has spent much of her professional career in public service," the bio reads. "Before becoming United States Attorney, she was an Assistant United States Attorney in the Economic Crimes Unit of the United States Attorney's Office in Boston for twelve years. While there, Ms. Ortiz also served as Grand Jury Supervisor. In addition to her federal service, Ms. Ortiz served as an Assistant District Attorney in Middlesex County, where she worked for a total of eight years, overseeing the District Court and prosecuting homicides, sexual assaults, robberies and other felony cases.

"In addition to her public service, Ms. Ortiz was a senior trial attorney at the law firm of Morisi & Associates, P.C., concentrating on civil, criminal, and governmental agency litigation. She also was a Program Associate and Training Coordinator at the Harvard Law School's Center for Criminal Justice from 1989 through 1991. There she worked on the Harvard/Guatemala Criminal Justice Project, which entailed collaborating with the judiciary of Guatemala and other legal professionals to implement criminal justice reforms in that country. In 1991, on behalf of the National Football League, Ms. Ortiz investigated allegations of sexual harassment that were made by a sports writer against the New England Patriots."

With research by Muriel Kane.

This article has been updated from the original.

Untidy beds may keep us healthy

Failing to make your bed in the morning may actually help keep you healthy, scientists believe.

Research suggests that while an unmade bed may look scruffy it is also unappealing to house dust mites thought to cause asthma and other allergies.

A Kingston University study discovered the bugs cannot survive in the warm, dry conditions found in an unmade bed.

The average bed could be home to up to 1.5 million house dust mites.

The bugs, which are less than a millimetre long, feed on scales of human skin and produce allergens which are easily inhaled during sleep.

The warm, damp conditions created in an occupied bed are ideal for the creatures, but they are less likely to thrive when moisture is in shorter supply.

'Small glands'

The scientists developed a computer model to track how changes in the home can reduce numbers of dust mites in beds.

Something as simple as leaving a bed unmade during the day can remove moisture from the sheets and mattress so the mites will dehydrate and eventually die Dr Stephen Pretlove

Researcher Dr Stephen Pretlove said: "We know that mites can only survive by taking in water from the atmosphere using small glands on the outside of their body.

"Something as simple as leaving a bed unmade during the day can remove moisture from the sheets and mattress so the mites will dehydrate and eventually die."

In the next stage of their research, the scientists are putting mite pockets into beds in 36 houses around the United Kingdom to test their computer model and will investigate how people's daily routines affect mite populations.

Building features such as heating, ventilation and insulation will also be altered to monitor how the mites cope.

Dr Pretlove said the research had the potential to reduce the £700m spent treating mite-induced illnesses each year in the UK.

"Our findings could help building designers create healthy homes and healthcare workers point out environments most at risk from mites."

Dr Matt Hallsworth, of the charity Asthma UK, said: 'House-dust mite allergen can be an important trigger for many people with asthma, but is notoriously difficult to avoid."

Professor Andrew Wardlaw, of the British Society for Allergy and Clinical Immunology, agreed.

He said: "Mites are very important in asthma and allergy and it would be good if ways were found to modifiy the home so that mite concentrations were reduced.

"It is true that mites need humid conditions to thrive and cannot survive in very dry (desert like) conditions.

"However, most homes in the UK are sufficiently humid for the mites to do well and I find it hard to believe that simply not making your bed would have any impact on the overall humidity."

Shootout At El Paso City Hall

National Security: In his speech Thursday, President Obama assured us that our "southern border is more se cure today than at any time in the past 20 years." So why is El Paso's City Hall taking fire from Mexico?

The president made his pitch for "comprehensive immigration reform" by assuring us problems on the border were already taken care of, so the next course of action was a modified amnesty program for 11 million illegal immigrants in the U.S.

But a funny thing happened on the same day he was urging Americans to go along: El Paso's City Hall found itself in a war zone as gunfire from the Mexican side from either traffickers or the Mexican lawmen trying to fight them pocked the edifice. News reports said as many as seven bullets hit the building. No one was hit — this time.

It's another sign of the horror in Mexico spilling onto the U.S. side.

Further down the border on the same day, 12 miles from Nogales, Ariz., 21 people were massacred in a fight between rival smuggling gangs over the right of way to bring their illegal immigrant "shipments" and narcotics into the U.S.

It all gives the president's assurances to Americans that the border situation is being dealt with an aura of unreality.

Statistics can be cut a number of ways, and some areas do have better border security. But the fact that it's uneven has left other areas — such as the Arizona border, more vulnerable as traffickers fight over the last remaining routes with intensity.

And dramatic events are happening across the border area anyway that suggest bottoms dropping out, with horrors unimaginable in the past becoming the new norm:

• The U.S. has lost control of actual U.S. territory to drug and migrant smugglers as much as 80 miles inland in Arizona. Any American who enters this area risks being shot dead.

• The Falcon Dam on Texas' lower Rio Grande was targeted for destruction by a Mexican cartel to destroy a rival's drug and alien-smuggling route. Had the foiled plot succeeded, 4 million people could have ended up downriver with mass casualties and deaths.

• Arizona now has the second-highest kidnapping rate in the world, behind only Mexico City, with nearly all of it due to drug and migrant smugglers and their quests for cash and territory.

• Mass graves have been discovered in New Mexico, believed by lawmen to be the work of cartels.

French News Web Site Shakes Sarkozy Camp

PARIS — At dinner parties there is talk of a French Watergate, but with at least one big difference: the would-be Woodwards and Bernsteins behind the biggest scandal to hit the presidency of Nicolas Sarkozy work on the Web instead of at a newspaper.

In an intensifying drama over accusations of political corruption, a news Web site called Mediapart this week published its most incendiary article yet, accusing Mr. Sarkozy of receiving illegal donations from Liliane Bettencourt, the 87-year-old heiress to the L’Oréal fortune, during his 2007 election campaign.

Spokesmen for Mr. Sarkozy have issued vehement denials. On Thursday, they said that the source of the accusations, a former accountant to Ms. Bettencourt, had partly recanted in testimony to the police. Aides to Mr. Sarkozy have lashed out at Mediapart. Xavier Bertrand, the leader of his right-leaning political party, the Union for a Popular Movement, accused the site of “fascist methods” on French radio last week.

Mediapart, however, has stuck by its article, reveling in its ability to set the news agenda in France, where its reports for weeks have provided the grist for the front pages of the next day’s newspapers. It is one of several news and investigative journalism Web sites that are flourishing in France, even as the printed press sinks deeper into crisis.

“It’s a story that has really galvanized the public,” said François Bonnet, the Mediapart editor. “It has everything in it: a great personality and a famous family, and now it has become a state affair.”

While Mr. Sarkozy’s approval ratings had been steadily declining even before the scandal, the polemic has so far been a boon to Mediapart.

Founded two years ago by Edwy Plenel, a former editor of Le Monde, and other former print journalists, Mediapart has pursued a business strategy as iconoclastic as its approach to news. Unlike the majority of news sites on the Web, it charges readers for access. Over the last month, fueled by the newfound notoriety, subscriptions have surged by 20 percent, to 30,000.

“Two years ago, everyone looked at us as if we were crazy, saying news on the Web is free,” Mr. Bonnet said. “We did everything in reverse.”

While aides to Mr. Sarkozy have accused Mediapart of pursuing a partisan political agenda, doing legwork for the opposition Socialist Party as the 2012 election approaches, Mr. Bonnet said the site was simply trying to serve as a forum for independent, hard-hitting journalism.

French newspapers, he said, have largely ceded this role as they sink ever deeper into financial crisis. Most major French dailies lose money. Some depend on public subsidies for survival, while others have taken shelter in larger industrial companies.

The biggest daily, Le Figaro, is part of the business empire of Serge Dassault, a tycoon who is a friend of Mr. Sarkozy’s. Bernard Arnault, chief executive of the LVMH Moët Hennessy Louis Vuitton luxury conglomerate, owns the business daily Les Echos. Meanwhile, Le Monde, in a move to avert bankruptcy, recently moved to sell a controlling stake to a group of investors with connection to the Socialist Party.

One of the investors in Le Monde, Xavier Niel, a telecommunications entrepreneur, also has stakes in Mediapart and another news Web site, Bakchich.

Mr. Bonnet said the financial dependency of the French press had instilled a culture of caution, creating a journalistic void. First, that was filled by alternative publications like the satirical weekly Le Canard Enchainé, and now, by Web sites like Mediapart.

“The written press in France is in a terrible crisis,” he said. “It doesn’t take risks anymore in terms of journalism.”

Other news-focused Web sites have also sought to step into the void. In 2007, Pierre Haski, a former deputy editor of the newspaper Libération, set up the site Rue89 with other former journalists from that paper. Bakchich, meanwhile, was started in 2006 by a former reporter at Le Canard Enchainé.

These sites frequently scoop newspapers, television and other news media in France, similar to counterparts in the United States like Talking Points Memo. That distinguishes France from other European countries, where the mainstream media still break most of the big news stories. When a scandal over parliamentarians’ expenses rocked Britain last year, for instance, the reports appeared in a newspaper, The Daily Telegraph.

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U.N. Security Council to condemn sinking

United Nations (CNN) -- The United Nations is set to formally condemn the action -- but not a particular nation -- for the March sinking of a South Korean warship, the Cheonan.

U.S. Ambassador Susan Rice emerged from a closed-door Security Council session Thursday afternoon, telling reporters that the United States had proposed a "presidential statement," agreed to by the five permanent Council members, plus Japan and South Korea.

The Security Council will convene Friday morning in a formal meeting to vote on the proclamation.

Rice called the statement "a very clear and appropriate response." She said the step "shows the Council's unity in confronting threats to peace and security."

"It underscores the importance of preventing further attacks and emphasizes the critical need to maintain peace and stability on the Korean Peninsula and in the larger region," Rice added.

A draft version of the statement expresses the Security Council's "deep sympathy and condolences," deploring the loss of 46 South Korean sailors when the Cheonan was ripped in two on March 26.

However, the statement stops short of naming North Korea as responsible for the incident, which an international joint civilian-military investigation deemed clearly culpable for the ship sinking. Australia, the UK, U.S., Sweden, and South Korea provided experts for the inquiry.

Instead the statement "expresses deep concern" over the investigators' conclusion that North Korea was to blame, calling for "appropriate and peaceful measures to be taken against those responsible." But the Security Council also takes note of the fact that North Korea "has stated it had nothing to do with the incident."

"Therefore," the statement reads, "the Security Council condemns the attack which led to the sinking of the Cheonan."

In June, investigation Co-chair Yoon Duk-yong presented technical and visual evidence to the Security Council, saying the Cheonan was definitively "sunk by a torpedo which was made in North Korea and the launching was also done by a North Korean midget submarine."

The isolated North has maintained its innocence, totally rejecting the investigation findings outright, questioning the validity of the experts involved, asking to conduct their own inquiry, and telling the Security Council that North Korea is the true victim of a conspiracy.

North Korean U.N. Ambassador Sin Son Ho made a rare appearance before reporters in June, saying that his nation "has nothing to do with the sinking of the Cheonan."

Sin questioned a number of the experts' conclusions, for instance asking how "the body of the torpedo can remain as it is while [a] huge warship is cut down into two parts? How can the torpedo remain?"

While Ambassador Sin warned, "our people and army will smash out aggressors with merciless counteraction if they dare to provoke us," the Security Council statement highlights the importance of maintaining peace and stability on the Korean Peninsula. It welcomes the "restraint shown" by South Korea in the handling of the Cheonan incident, urging the resumption of dialogue and negotiations between the strained neighboring nations.

Unlike a Security Council resolution, a presidential statement is not legally binding but does require accord amongst permanent members China, Russia, France, the United Kingdom, and the United States.

It will be read aloud by the Nigerian ambassador, the rotating Security Council president for the month of July, after being voted on by the full 15-member body on Friday.

Word is .....

Tales from the locals ...

Father vs. Son

A middle aged man has what is called an incurable form of MS. A former working class tax payer all his life now on disability with a not so bright future. Vanderbilt University hospital is trying some experimental procedures and feeding him a diet of very expensive drugs along with the recommendation that he self medicate with a little outside the law help ... marijuana. The man says it's the one thing that gives him relief.

Buying pot is an expensive proposition so he takes a chance, gets a few good seeds and grows 4 plants. There's no profit motive, personal use only and the helicopter jockeys who are now searching the county don't seem to want to fool with small amounts, only big crops that will help justify their existence.

Then the father who mows his son's yard finds them. What does he do? Cuts them down and feeds them to his goats.

Understandably that is a depressing predicament for someone looking to ease the pain.

His mother comes over to his house to talk. What reason did she give for the destruction of personal property? Because if he got busted the parent's name would be disgraced. It would be in the newspaper and folks would talk. It's a small county where everyone knows everyone else

What's really bad is that the Tennessee legislature is jerking around with the medical marijuana issue. Debate has been put off again. People who are actually suffering when relief is even suggested by knowing and compassionate doctors be damned. Bible belt politics as usual. There are still too many misinformed closed minded 'voters' who cringe at the thought of legalizing a plant with over 20,000 known uses for the politicians to do the right thing. They think it might cost them a vote or two and get them labeled as soft on drugs. Disingenuous cowards is what I call them.

Corporate predictions ...

A conversation with a long time Caterpillar equipment salesman didn't reveal anything new for those paying attention but did give a glimpse of what a very large corporation is conveying to their management.

The Cat think tank won't be issuing a press release but here's what the salesman said they said.

There is no recovery. At least for the foreseeable future. The word depression is being used. Sales of new product are virtually nonexistent and what sales have occurred this year will be gone as the 'stimulus' money dries up. Further cuts will be necessary and managers are put on notice to plan accordingly.

Additional word is that small time contractors who have been in business for many years are going bankrupt left and right. Soon only the 'big boys' will be left and even they will be hurting badly in short time.

Can't get out of Florida ...

An 80 year old man and his wife own a farm close by. They have slowly been getting the property ready to move here. They have worked and owned commercial and residential property in central Florida all their lives and want to leave for good but there's a problem.

I asked him why he doesn't sell his Florida property now in case the Gulf oil spill doesn't end anytime soon or the economy completely collapses and the value of all he owns is gone.

His response was that he has been trying to liquidate his properties for over two years. Buyers were interested when he put them on the market in early 2008 but the economy started to fall and there has not been a single offer for anything.

He's active, fairly healthy and ready to finally retire to what he considers a safe place. Fed up with Florida but lacking the money to get out without being able to sell out. Paying taxes for over 60 years, contributing to the economy and never taking a government handout doesn't count for much these days.

~~~~~

Individual stories in the decline of the America are many and varied. They don't mean a whole lot in the overall scheme of things and that's how it has been planned.

The powers that be twist the statistics, manipulate the money, make laws against the people and think they won't be affected. The 'small people' are expendable.

But the PTB will be affected, it won't be pretty for them and it's just a matter of time.