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WSJ Senior Economic Writer Steve Moore argues Americans are going to face a tax increase of $494 billion on January 1, 2013, and that this disaster wo...
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Over the last decade congress -- developed a bad happen to passing temporary tax cuts the bush tax cuts the payroll tax cut you name but.
They -- have a hard time passing permanent tax laws like they used to do.
So guess what's happened a very long list of these temporary tax cuts are going to expire at the end of this year and if congress does nothing you know they won't do -- -- -- during.
An election year.
Our taxes are gonna go up quite almost a half a trillion dollars in January 1 when we show you.
First of all this kind of Big Three big groups the bush tax cuts will expire that'll -- -- 34% of the 494.
Billion dollar increase coming January 1 34% but will come from the bush tax cuts expiring.
The payroll tax cuts another 45% of that number.
Will debt to expired so that's going to be another big chunk and then Alternative Minimum Tax the -- they -- it every year but will they this year.
Let me break it down for you we've got here to -- bush tax -- 165 billion.
Payroll tax cut 124 offered a minimum -- -- 118.
Obamacare this is just five.
Of the seventeen taxes that are going to be -- raised.
To fund obamacare.
Five of them kick in in 2013.
That's 22 billion there.
The stimulus a lot of tax a breaks there expire tax Extenders things like buying a hybrid car.
Teachers credits for buying things for the classroom that goes away the estate tax to death tax goes up business investment they don't -- -- right off their equipment like you do now.
100% so that's gonna have to be amortized -- raise that number and let me break it down to brackets is to give you little idea if you're where both people live either in the 25 -- 2810%.
Tax bracket.
That's going to go whopping 27 billion dollars gonna come out of individual's pockets for that the 10% bracket which was for the lowest income.
That was greater the bush tax cuts is going to go away that'll raise 37 billion from the lowest income folks marriage penalty.
Comes back.
And so does the child tax credit increases they decrease which will raise more money there so all in all.
A huge tax increase is facing you and me all of -- not just the wealthy.
Come January 1.
-- join the Dow is a senior economic writer with the Wall Street Journal Stephen Moore Stephen.
This is massive this is almost a half a trillion dollars in taxes in less than nine months from now.
And it's just -- starting to be talked about this is going to this is about.
Class warfare the wealth leave the above 250000.
-- it's gonna affect every one.
Yet as Tom and I call this they.
Ticking tax time bomb that you're right just now people are starting to pay some attention to about.
I think most Americans a lot of investors still haven't focused on how big this says.
But my estimate stop this would be the biggest tax increase and at least thirty years and maybe a lot more than that.
-- one of the things -- That people want to consider if you're an investor is if the capital gains taxes going up for the dividend tax is going -- business tax are going up.
You might want to think about selling your stock.
Before those were those rates go up in other words if you've been holding on to a stock for a long time that's had a gain.
-- -- -- may want to take back in 2012.
Rather than 2013 when -- -- that pay -- higher capital gains to get here we are in April I've already thinking about it I have already thinking about it because I don't wanna have to be the one.
They'll wait until everybody else is out the door I think -- to be a rush.
-- you know this and by the way that the evidence is very clear on this site had a a piece this week in the Wall Street Journal on this that.
Every time we've raised the capital gains tax vote last time we did this was in 1980 sex.
There was a huge selloff of stocks at the end of eighty sex before the tax rate went up and you could see a big big spike -- and stock sales.
-- before the tax rate went up but I think that's exactly what you're gonna see this year which by the way -- a political dimension to it.
Because if you get people selling off all their stocks right before the election which is -- this would happen.
That's not a very good sign for Barack Obama if he's out running for reelection and a bear market and a sell -- Well I -- but I mean you write about economics but this is really.
The politics of this are going to be really amazing to watch but the economic impact.
So many times we hear about the way Washington speak goes about.
The Buffett rule for example 47 billion over ten years -- I don't know about you but I don't know what I'm gonna make her spend in ten years for about.
But but this isn't about over ten years this is 494.
Billion in one day.
Yeah look I believe.
-- that the economy is doing -- even though we didn't get a great jobs report last last week but the economy showing some signs of life.
But I think this is the kind of thing that just puts a huge wet -- get.
On the economy starting in the fall as people start looking ahead to those big tax increases that -- I will even go so far is to say.
If those tax increases take effect -- -- 12013.
I believe it could could be the trigger for a double dip recession.
Look at the argument was made by President Obama and everybody else on this business about the payroll tax cut let's do that to try to give up.
-- prime the pump a little bit.
It well and it didn't work so let's -- -- again in 2012.
How do you on do that how do you -- is going to be noticeable on people's paychecks come the first paycheck in Jan.
-- Well good point you know that the problem with the short term.
Temporary tax cuts.
Is that they expire at.
And that was supposed to expire in 2000 generate 2012 says that -- extended for another year knowledge underwent 2013 has got a -- gonna come around.
And people are not just gonna feel -- the -- from the higher capital gains and income taxes and dividend taxes but -- right top they're also gonna have now.
Huge a lot of increase.
The money with -- from their paycheck that's gonna take money away from consumers.
It's gonna dampen consumer spending look for the same reason that cutting the gap dubbed the payroll tax was gonna help the economy.
Raising Unocal bid -- payroll tax takes money out of the economy so that's another reason that thinks 2013 could be a re.
Million dollars a year yet but it but in in that town where -- -- and -- It's it's all about let's get through the election -- -- get to the election.
And then you'll have the lame duck that.
You know got I don't know what they're gonna do but but nobody -- gonna work on this thing you know they won't until -- direction.
You're right -- and this is so irresponsible.
Economic policy because when you talk to investors.
Or making long term decisions over 51020 years about how they're gonna invest their money when you talk.
The businessman should I buy that new piece of equipment should -- build that factory felt how in the world is anybody do any planning for 2013.
Nobody has any idea what the passcode is gonna be next year it is.
It is the most.
Bastard -- -- way of doing taxes I've ever seen because.
No one can make any predictions -- we -- what is gonna -- going to be the rate on payroll what is going to be the rate on capital gains dividends what's going to be the income tax rate will we have about the tax roll will people be hit by the empty.
It's a trend -- cash Hobbits a trend.
-- -- it really it and then the the obamacare -- decision of course we have to wait for the Supreme Court to decide on that one but.
In this in this list was 50718.
Obamacare taxes go into five of them go into effect January 1.
But there's another twelve that go in after that so yeah that whole question that keeps putting -- a drag Europe cloud over the economy is still gonna be there for people trying to plan their businesses for next year in the year after.
That's right and then you know time you've been in this business a long time I have been in this business a long time we want to rule of investing is that investors hate uncertainty -- okay.
And what he's done is we've we've basically said you know what folks you don't know what's behind door want.
That's an open -- first but you don't know what's behind that well that's the kind of uncertainty that that freezes and that's -- That freezes business in place and it doesn't cause the kind of growth but we need to put sixteen million unemployed people back to work.
We've been -- we've been in this turtle -- now for three years where.
You know the turtle -- expect in just -- -- out the storm and I think that's what's that what's gonna happen Steve Moore always great to get your opinion in your views.
