See also:  Get 'Em While They're Hot: Medicine Cabinet Tax Hits in 120 Days

In just 120 days, 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:

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 tax credit 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 top capital gains tax will rise from 15 percent this year to 20 percent in 2011.  The top dividends tax rate 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 1^st 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.  The 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. Until this year, a retired person with an IRA could 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 Amnesty Is Here

 

From the Desk of Judicial Watch President Tom Fitton:

 

Concerned about the Obama administration’s plan to grant amnesty to illegal aliens? Guess what. It’s already happening.

According to The Houston Chronicle:

The Department of Homeland Security is systematically reviewing thousands of pending immigration cases and moving to dismiss those filed against suspected illegal immigrants who have no serious criminal records, according to several sources familiar with the efforts.

Culling the immigration court system dockets of noncriminals started in earnest in Houston about a month ago and has stunned local immigration attorneys, who have reported coming to court anticipating clients' deportations only to learn that the government was dismissing their cases.

In some instances, the article notes, illegal aliens who have been convicted of crimes will be allowed to stay in the country as long as these crimes do not involve a DWI, family violence or sexual assault. But other than those specific circumstances, right now it appears the other deportation candidates are in the clear. (Most of these folks are in the system because they were arrested for committing crimes, so to release those who have only been “convicted” means that illegal alien violent criminals are being set free.)

The court "was terminating all of the cases that came up," said one immigration attorney who was notified that the government requested dismissals in three of his deportation cases. "It was absolutely fantastic."

According to an Immigration and Customs Enforcement (ICE) memo, this new policy could impact up to 17,000 cases.

And what is the justification for this lawlessness? The Obama administration is pretending it does not have enough money to do its job of deporting all aliens living in the United States illegally.

So there you have it folks. The Obama administration has decided that neither the will of the American people nor the rule of law matter at all. Obama is implementing illegal alien amnesty by hook and by crook.

But are we really all that surprised?

Remember, it was just a few weeks ago that an Obama administration memo surfaced outlining a comprehensive strategy to grant amnesty without approval by Congress. The two-faced Obama administration vehemently downplayed the significance of the memo. (Administration officials called it “brainstorming.”) But all the while the administration continued to push forward with its backdoor amnesty plan.

Following the memo’s disclosure, on August 23 Judicial Watch joined a number of other conservative organizations and sent a letter to the president expressing our extreme dissatisfaction with the Obama administration’s unlawful strategy as outlined in the memo:

“There have been reports that your administration is considering usage of its administrative authority to effectively legalize significant numbers of illegal aliens. We strongly urge that you refrain from pursuing that tactic. We believe that such an abuse of power would further polarize the immigration issue, which already is so controversial that reasonable discussion is confounded.”

The letter (and a related press conference that included Judicial Watch’s Chris Farrell) earned widespread press coverage: “A group of conservative activists slammed the Obama administration Monday for allegedly planning to use its administrative authority to undercut immigration restrictions in the wake of congressional inaction on a comprehensive reform bill,” CNN’s Paul Courson wrote. “In a letter sent to the White House, leaders of 17 conservative grass-roots organizations cited reports that the administration is considering using its executive power ‘to effectively legalize significant numbers of illegal aliens.’”

But nonetheless, President Obama has failed to alter his administration’s reprehensible and unlawful behavior one single bit. And it is causing a revolt in the Imigration and Customs Enforcement bureuacracy. Even the liberals at The Washington Post have noticed that ICE’s front-line immigration enforcement personnel are opposing the non-enforcement program being implemented by Obama political appointees. In a rare action, a major ICE union announced a unaminous vote of “no confidence” in the Obama leadership team at ICE. The detail of the union's complaint is devastating and documents a crisis of law enforcement at ICE. The union notes, for instance, that:

Criminal aliens incarcerated in local jails seek out ICE officers and volunteer for deportation to avoid prosecution, conviction and serving prison sentences. Criminal aliens openly brag to ICE officers that they are taking advantage of the broken immigration system and will be back in the United States within days to commit crimes, while United States citizens arrested for the same offenses serve prison sentences. State and local law enforcement, prosecutors and jails are equally overwhelmed by the criminal alien problem and lack the resources to prosecute and house these prisoners, resulting in the release of criminal aliens back into local communities before making contact with ICE. Thousands of other criminal aliens are released to ICE without being tried for their criminal charges. ICE senior leadership is aware that the system is broken, yet refuses to alert Congress to the severity of the situation and request additional resources to provide better enforcement and support of local agencies.

What an ugly mess caused by the Obama administration’s radical hositility to the rule of law! And U.S. citizens and legal alien residents suffer as a result.

 

 

 

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