The tax hike cometh

An article at Yahoo finance runs down all the tax hikes coming at the end of the year:

Higher Tax Rates for All

You may have been led to believe that only individuals in the top two brackets will face higher federal income taxes when the Bush cuts go bye-bye. Not true! Unless Congress takes action and President Obama goes along, rates will go up for everyone — not just a sliver of the wealthiest Americans. The current six rate brackets of 10%, 15%, 25%, 28%, 33% and 35% will be replaced by five new brackets with the higher rates of 15%, 28%, 31%, 36% and 39.6%. Just a few months ago, it seemed like a safe bet that Congress would make a fix to keep the existing 10%, 15%, 25% and 28% rate brackets to help out lower and middle-income folks. That bet is now looking iffy.

Higher Capital Gains and Dividends Taxes for All

Right now, the maximum federal rate on long-term capital gains and dividends is only 15%. Starting next year, the maximum rate on long-term gains will increase to 20%. The maximum rate on dividends will skyrocket to 39.6% unless action is taken to limit the rate to 20%, as the president has repeatedly promised. Plan on 39.6%, and hope I’m wrong.

Right now, an unbeatable 0% rate applies to long-term gains and dividends collected by folks in lowest two rate brackets of 10% and 15%. Starting next year, those folks will pay 10% on long-term gains and 15% and 28% on dividends (compared with 0% now) unless a change is made.

So people in the lowest tax bracket will see their basic rate will go up by half, and they will start paying taxes on capital gains and dividends where today they pay nothing. And that’s not all, the marriage penalty will be reinstated (for everyone) and the phase-outs of itemized deductions and personalized exemptions will be back (which affect people earning well below $250/year).

Democrats will try to say that allowing tax cuts to expire doesn’t count as a tax hike. I don’t think that the public will buy that kind of sophistry as they watch their taxes go up, but I guess we’ll see.

(Via Instapundit.)

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