By Floyd Brown
Earlier this week, I explained how the latest Obama budget would impact the wallets of Social Security recipients. Now, I want to explain how several other new Obama tax hikes will impact you in the near future.
In the just-released budget, there’s a mountain of new taxes the size of Everest. President Obama is a guy who has never met a tax he didn’t like. These new taxes would bring the national tax load to a staggering 20% of our economy.
The following are ten new Obama taxes that, if they pass, will have a huge impact on you and will certainly hurt the already sluggish economy.
1. The “Chained CPI”
Of the new tax increases, the “chained CPI” is the most insidious. Obama’s budget would benefit by manipulating and altering the definition of inflation for all federal budget uses – including federal taxation.
Currently, income tax brackets are indexed to rising prices. By changing the number used to calculate inflation, we face a very real income tax hike.
This is a tax increase for everyone paying income taxes, including middle-class Americans.
It’s my belief that inflation is currently underreported, and experts in the field agree. The “chained CPI” will only make it worse.
Your taxes go up not because of real earnings, but phony earnings that simply keep you on pace with inflation. Congress’ Joint Committee on Taxation estimates that if enacted, a “chained CPI” would cause a $100 billion tax increase alone.
2. Itemized Deduction Cap
Also included in the Obama plan is a cap on itemized deductions. The deductions, such as those for charitable donations and mortgage interest, are usually the sacred cows of Congress.
But not any longer. The cap will directly hurt charities, the housing market, and (of course) taxpayers. Regardless of which tax bracket you belong to, this provision ensures that you can’t benefit any more than if you were in the 28% bracket.
There are three tax brackets above 28% – the 33%, 35%, and 39.6% brackets. Thus, many families will not be able to fully deduct mortgage interest, charitable deductions, or state taxes, among other expenses.
3. Increased Death Tax
The Obama budget would raise the estate tax rate from the current 40% to 45%. And the budget would also reduce the inflation-indexed death tax “standard deduction” from $10.3 million for married couples to $3.5 million with no inflation allowance.
4. The “Buffett Rule”
The Obama budget would inflict the newfangled “Buffett rule” on taxpayers whose adjusted gross income is above $1 million. These taxpayers would suffer an average tax rate of 30%.
5. Increased Tobacco Tax
Tobacco users face a more than 93% increase in the tobacco tax, from $1.01 to $1.95 per pack. On average, a typical smoker in America makes about $40,000 per year, meaning this tax directly targets middle-class Americans.
But this is not the first time Obama has raised tobacco taxes. In 2009, he signed into law a 156% increase in the tobacco tax. The tax hit on smokers will total $78 billion.
6. IRA and 401k Plan Tax Hikes