Happy
New Year Middle Class: The Fiscal Cliff Is Going To Rip You To
Shreads
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The
middle class has quite a gift welcoming them as the calendar flips
over to 2013. Their payroll taxes are going to go up, their
income taxes are going to go up, and approximately 28 million
households are going to be hit with a huge, unexpected AMT tax bill
on their 2012 earnings. So happy New Year middle class!
You are about to be ripped to shreds.
In addition to the tax increases that I just mentioned, approximately two million unemployed Americans will instantly lose their extended unemployment benefits when 2013 begins, and new Obamacare tax hikes which will cost American taxpayers about a trillion dollars over the next decade will start to go into effect.
If Congress is not able to come to some sort of a deal, all middle class families in America will be sending thousands more dollars to Uncle Sam next year than they were previously. And considering the fact that the middle class is already steadily shrinkingand that the U.S. economy is already in an advanced state of decline, that is not good news.
You would think that both major political parties would want to do something to keep the middle class from being hit with this kind of tax sledgehammer. Unfortunately, at this point it appears that our "leaders" in Washington D.C. are incapable of getting anything done. So get ready for much smaller paychecks and much larger tax bills. What is coming is not going to be pleasant.
You are about to be ripped to shreds.
In addition to the tax increases that I just mentioned, approximately two million unemployed Americans will instantly lose their extended unemployment benefits when 2013 begins, and new Obamacare tax hikes which will cost American taxpayers about a trillion dollars over the next decade will start to go into effect.
If Congress is not able to come to some sort of a deal, all middle class families in America will be sending thousands more dollars to Uncle Sam next year than they were previously. And considering the fact that the middle class is already steadily shrinkingand that the U.S. economy is already in an advanced state of decline, that is not good news.
You would think that both major political parties would want to do something to keep the middle class from being hit with this kind of tax sledgehammer. Unfortunately, at this point it appears that our "leaders" in Washington D.C. are incapable of getting anything done. So get ready for much smaller paychecks and much larger tax bills. What is coming is not going to be pleasant.
So
what happened?
Weren't
the tax increases only supposed to be for the wealthy?
Well,
that is what the politicians always promise, but it is always the
middle class that ends up getting hit the hardest.
In
this day and age, the big corporations and the ultra-wealthy are
absolute masters at avoiding taxes.
For
example, Facebook paid approximately $4.64
million in
taxes on their entire foreign profits of $1.344 billion for
2011.
Overall,
the global elite have approximately
18 trillion dollarsparked
in offshore tax havens such as the Cayman Islands.
Keep
in mind that U.S. GDP for 2011 was only slightly above 15 trillion
dollars.
So
the global elite have an amount of money parked in offshore banks
that is substantially larger than the total value of all goods and
services produced in the United States each year.
According
to one estimate, a
third of all the wealth in the entire world is
stationed in offshore banks. Our politicians are playing
checkers and the global elite are playing chess when it comes to
taxes. Our current system of taxation is irreversibly broken
and should be entirely thrown out and replaced with something else.
And
of course under our current system those that are poor don't pay much
in taxes because they are just trying to survive.
So
who always ends up getting the painful end of the hammer?
The
middle class does, and that really stinks.
Let
us hope and pray that our politicians can come together and do
something for the middle class. In particular, we should all be
screaming and yelling at our politicians about the Alternative
Minimum Tax. It was originally designed as a method to "tax
the rich", but unless Congress does something the middle class
is about to be ripped to shreds by it. The following is from a
recent CNBC
article about
the AMT...
In a cruel epilogue to 2012, roughly 28 million families would owe the IRS $86 billion more than they anticipated for this year should the country plunge off the cliff, according to the nonpartisan Tax Policy Center.
Those families would face the "Alternative Minimum Tax," which was introduced in 1969 to supposedly guarantee that wealthy Americans could not elude the taxman. But the AMT not only flopped, it was never indexed to inflation. So with each passing year, it seeps away from high society and into the wallets of Target and Wal-Mart shoppers. That sets up a disaster for April 15.
So
how much money are we talking about?
According
to that same article, many families are about to be socked by tax
bills that will be absolutely huge...
On the whole, 98 percent of those with incomes between $200,000 to $500,000 would pay an additional $11,000 in AMT this year, according to the center's estimates. About 88 percent of those with incomes of $100,000 to $200,000 would need to fork over another $3100, and even the majority of Americans with earnings between $75,000 and $100,000 would have an AMT liability.
Most
of the tax increases that will be coming as a result of the fiscal
cliff will be for 2013 earnings, but the AMT tax hike will apply to
2012 earnings.
So if you end up falling under the AMT, you better get ready to write
a very large check to Uncle Sam in just a couple of months.
And
the AMT is only just one of the very painful tax increases that
American families will be facing. If no deal is reached in
Congress, every single middle class American taxpayer will be dealing
with significantly higher taxes.
A
recent ABC News report entitled "Fiscal
Cliff: By The Numbers"
detailed some of the other tax increases that you can expect in
2013...
So
why don't our politicians do something about all of this?
What
are they fighting so bitterly about anyway?
Sadly, neither
side is actually serious about
substantially reducing the size of government deficits or about
getting government spending under control.
During
a recent interview on
CNBC,
Ron Paul explained that "they pretend they are fighting up
there, but they really aren't. They are arguing over power, spin, who
looks good, who looks bad; all trying to preserve the system where
they can spend what they want, take care of their friends and print
money when they need it."
Most
in the mainstream media are making it sound like some kind of a
"battle royal" is going on in Washington, but as Lou
Dobbs recently
pointed out,
the U.S. national debt is going to end up in just about the same
place no matter what happens.
According
to Dobbs, if we "do nothing" the U.S. national debt will be
approximately 25.8 trillion dollars in 2022.
If
"Obama wins", the U.S. national debt will be approximately
25.4 trillion dollars in 2022.
If
"Boehner wins", the U.S. national debt will be
approximately 25.2 trillion dollars in 2022.
So
they are putting all of us through all of this torture even though
nothing will really change in the long run no matter who wins?
What
kind of a circus is this?
Barack
Obama has just issued a new executive order that ends the pay freeze
for federal workers that had been in place.
So
now all federal employees will be getting a nice hefty pay raise.
For
example, Vice President Joe Biden brought in $225,521 this year.
Next
year, he will make $231,900.
Not
that our politicians really need the money. Most members of
Congress are
millionaires anyway.
But if they can get us to pay for it, they might as well go for it,
eh?
There
are now close to half a million federal employees that bring homeat
least $100,000 a year.
Plus, it is important to keep in mind that the benefits that federal
employees get are absolutely outstanding, and it is close to
impossible to actually fire a federal worker.
Life
is good if you are working for Uncle Sam.
Meanwhile,
our politicians seem determined to keep draining more blood out of
the middle class. Even if a "deal" is reached, we
will still be hit by some categories of tax increases. Let's
just hope and pray that we don't get hit by all of the tax increases
that are scheduled to go into effect. That would be a financial
disaster for millions of families.
So
happy New Year middle class. Your taxes are about to go through
the roof and our politicians are too busy fighting with each other to
do anything about it.
What
else will 2013 bring?
