The Specter of Taxmageddon Rises
On this Halloween, a truly frightening specter is looming.
No amount of garlic, crosses, or exorcists can help us—only Congress and the President can chase this ghoul away.
A horrifying combination of expiring pro-growth tax policies from 2001 and 2003, the end of the once-temporary payroll tax cut, and just a few of Obamacare’s 18 new tax hikes, Taxmageddon will be the largest tax increase EVER to hit Americans. It’s nearly $500 billion in one year, starting January 1. That’s two months away.
The number $500 billion is rather large and abstract, so The Heritage Foundation has broken down the expected tax increases per person just for 2013:
- Families with an average income of $70,662: tax increase of $4,138
- Baby boomers with an average income of $95,099: tax increase of $4,223
- Low-income workers with an average income of $24,757: tax increase of $1,207
- Millennials with an average income of $23,917: tax increase of $1,099
- Retirees with an average income of $42,553: tax increase of $857
>>> See the info graphic.
And if that isn’t scary enough, the nonpartisan Congressional Budget Office has forecasted another recession in the coming year. The last thing this country needs is another recession, after years of high unemployment and months of a sluggish, barely noticeable recovery.
The tax hikes will hit small businesses very hard—and not just any small businesses, but the ones that create jobs. As Heritage’s Curtis Dubay and Romina Boccia explain:
The businesses that would pay the higher tax rates proposed by President Obama earn almost all the income earned by small businesses that employ workers. According to President Obama’s own Treasury Department, these job creators earn 91 percent of the income earned by flow-through employer-businesses. These are the biggest, most successful small businesses. They employ more than half the private workforce, according to an Ernst and Young study. Raising their taxes would destroy more than 700,000 jobs.
There’s one way to address Taxmageddon—reverse it.
Why hasn’t Congress acted to prevent this? Simple: The House passed a bill that would prevent the largest share of Taxmageddon, but the Senate failed to finish the job.
It appears this job will fall to the next Congress now. When the new Congress takes office on January 3, 2013, after counting the electoral votes for the presidency, the first order of business should be to reverse Taxmageddon. The congressional leadership and the successful presidential candidate should make clear right after the election that reversing Taxmageddon will be their top priority, to reassure businesses and employees as soon as possible.
If this future Congress also fails to act, as the current Congress has, then trick-or-treaters for years to come will tremble at the telling of this tale—a Congress who, when economic darkness threatened, chose this cruel and mysterious route of making things worse.
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- Tune in online to the Istook Live! radio show, broadcasting from The Heritage Foundation from 9 a.m.-noon ET, as Ernest Istook talks Hurricane Sandy and the Benghazi information cover-up.