The Death Tax Makes Obama and the Democrats the Grim Reaper

With a slew of new taxes scheduled for implementation in 2013, including Obamacare taxes, and with the 12/31/12 expiration of the Bush tax cuts that will indeed have a profoundly devastating effect on the middle class, small business and the economy, 2013 is destined to herald in more government planned gloom, doom and misery.

But of all the draconian measures to plunder the American people, none is more permanently confiscatory than the estate tax because it constitutes an outright expropriation of small family businesses.

The Bush tax cuts had a $5 million dollar exemption on the estate tax before an estate tax rate of 35% kicked in. When the Bush tax cuts expire, the floor for the estate tax drops to $1 million and the tax rate jumps to 55%. The estate tax will have a devastating impact on small family businesses who simply don't have the cash to pay the tax.

What does this mean?

Are New Inheritance Tax Laws Really Aimed At The Rich? Or Is The Average Joe Getting Caught In The Cross Fire?

What Are The New Inheritance Taxes Going To Be?

Currently, there is a $5 million estate tax exemption, and only those who stand to inherit an estate that exceeds that amount have to pay a tax rate of 35%. In January, 2013, many liberals have been celebrating what they consider to be a fair tax on the rich person. What they don’t realize is that the$ 1 million exemption and 55% taxation for those whose estate exceeds 1 million, will affect many Americans who could hardly be considered as wealthy. In this day and age, it doesn’t take much for an estate to add up to a million dollars. If you consider house, 401(k), savings, and other investments and assets, many people will fall into the new tax category.

What Will Happen To The Average Small Farmer When The New Inheritance Tax Is Imposed

97% of farms, small ranches, and small businesses will be affected by this tax. The problem is, the recipients of the inheritance are small-time people who barely make enough each year to scrape by. Individuals like this will have no option but to come up with the 55% tax to give to Uncle Sam, or they will be forced to sell the family farm or business that has been in the family for generations. Most farmers don’t just have $500k just sitting around as a tax fee for a property worth 1 million dollars.

The new inheritance tax could represent the end of an era. The death of the “family farm” as we know it to be today. Even if you are not a farmer or a business owner, your inheritance may be at stake.

The above estate tax scenario is a crushing blow to small family businesses. Basically, the entire tax structure at all levels is a war on small business, a war on entrepreneurship, a war on the family farm, and a war on the ability of ordinary Americans to earn a living and support their families. Meanwhile, the Democrats can't wait to sink their carnivorous fangs into those productive and entrepreneurial bourgeois that they hold in the highest contempt and vow to reduce to serfs and beggars. A farmer really doesn't have anything of value except his dirt and small family farms and entrepreneurs aren't swimming in cash like trust fund babies.

Welcome to the New America where toiling to earn money to feed your family is verboten and if you dare have the blazing audacity to even attempt it, the government confiscators will be there to crush you.

The Bush Tax Cuts and Why the States are Lusting to Go Over the Fiscal Cliff

Liberals and Democrats are literally foaming at the mouth in anticipation of new tax and Obamacare revenues pouring in starting January 1, 2013.   Going 'over the cliff' is music to their confiscatory ears.   It's what they live for - growing state powers and crushing private business, especially small family owned businesses where entrepreneurship and innovation have historically driven the economy.  According to liberal speak: We don't need no stinking economy because we'll just steal what we want to impose our dream totalitarian society.

Starting with the Bush tax cuts that expire on 12/31/12 and the ongoing 'going over the cliff' fiasco, the out of control deficit spending federal government (Fedzilla) is lusting for new taxes to ring in the New Year, specifically with the implementation of Obamacare taxes and the expiration of the Bush tax cuts. Exactly why the idiot Republicans put an expiration date on the Bush tax cuts as opposed to making them permanent remains a mystery that is easily solved. The Republicans are fundamentally opposed to lower taxes and cutting spending.

Although the Democrats never saw a tax increase they didn't love, the Dems are beginning to perceive ballot box blowback because the Bush tax cuts really did benefit the middle class that the Dems claim to love and perpetually romance with pledges of undying devotion.  For the Dems it's all about endless class warfare. Now the Dems are backing down on letting the Bush tax cuts expire and are finally acknowledging that the Bush tax cuts did indeed accrue to the middle class.

Obama's Middle-Class Tax Flip Wall Street Journal

Here's how President Obama put it during a recent White House event with a group of middle-class Americans: Unless Congress acts, he said, "starting Jan. 1, every family in America will see their taxes automatically go up." 

He went on: "A typical middle-class family of four would see its income taxes go up by $2,200. That's $2,200 out of people's pockets. That means less money for buying groceries, less money for filling prescriptions, less money for buying diapers. It means a tougher choice between paying the rent and paying tuition. And middle-class families just can't afford that now." 

To emphasize that these cuts are a big deal, he asked people to "tell members of Congress what a $2,000 tax hike would mean to you." He is now taking his message on the road, telling a group of Michigan auto workers on Monday that the end of the Bush cut would be "a hit you cannot afford to take." 

In any honest universe, this would be news. President Obama says the middle class benefits mightily from the Bush tax cuts and cannot afford to see them expire.

Clearly, maintaining middle class tax cuts is now a hot potato political issue with significant consequences as the Republicans and Democrats calculate and plot ways to beneficially politicize the issue. In reality the Dems really don't care about going over the so-called fiscal cliff because they've opposed the Bush tax cuts for years.  Moreover, if the Republicans refuse to increases taxes on the rich as the Dems demand and if the middle class incurs taxes increases because of the Republican refusal to raise taxes on the rich (incomes over $250,000 a year), the Dems can just point the finger of blame at the Republicans.  The advantage point goes to the Dems because it's difficult to see how they can lose.

Besides playing the calculated game of political blowback on the Bush tax cuts, there are other profoundly significant issues.  The Bush tax cuts had a $5 million dollar exemption on the estate tax before an estate tax rate of 35% kicked in.  When the Bush tax cuts expire, the floor for the estate tax drops to $1 million and the tax rate increases to 55%.  The estate tax will have a devastating impact on small family businesses who simply don't have the cash to pay the tax.

Are New Inheritance Tax Laws Really Aimed At The Rich? Or Is The Average Joe Getting Caught In The Cross Fire?

What Are The New Inheritance Taxes Going To Be?

Currently, there is a $5 million estate tax exemption, and only those who stand to inherit an estate that exceeds that amount have to pay a tax rate of 35%. In January, 2013, many liberals have been celebrating what they consider to be a fair tax on the rich person. What they don’t realize is that the$ 1 million exemption and 55% taxation for those whose estate exceeds 1 million, will affect many Americans who could hardly be considered as wealthy. In this day and age, it doesn’t take much for an estate to add up to a million dollars. If you consider house, 401(k), savings, and other investments and assets, many people will fall into the new tax category.

What Will Happen To The Average Small Farmer When The New Inheritance Tax Is Imposed

97% of farms, small ranches, and small businesses will be affected by this tax. The problem is, the recipients of the inheritance are small-time people who barely make enough each year to scrape by. Individuals like this will have no option but to come up with the 55% tax to give to Uncle Sam, or they will be forced to sell the family farm or business that has been in the family for generations. Most farmers don’t just have $500k just sitting around as a tax fee for a property worth 1 million dollars.

The new inheritance tax could represent the end of an era. The death of the “family farm” as we know it to be today. Even if you are not a farmer or a business owner, your inheritance may be at stake.

The above estate tax scenario is a crushing blow to small family businesses.  However, the situation is compounded by the fact that the vastly increased estate taxes on middle class entrepreneurs are also endorsed by the states because Fedzilla engineered a revenue sharing  scheme.

Why States May Want to Fall off the 'Cliff'

In an example of federal and state tax law interaction that gets little notice on Capitol Hill, 30 states next year could collect $3 billion more in estate taxes if Congress and President Barack Obama do not act soon, estimated the Urban-Brookings Tax Policy Center, a Washington think tank.

The reason? The federal estate tax would return with a vengeance and so would a federal credit system that shares a portion of it with the 30 states. They had been getting their cut of this tax revenue stream until the early 2000s. That was when the credit system for payment of state estate tax went away due to tax cuts enacted under former President George W. Bush.

With the return of the credit system next year as part of the "cliff," states such as Florida, Colorado and Texas -- which have not collected estate tax since 2004 -- could resume doing so. California Gov. Jerry Brown has already begun to add the anticipated estate tax revenue into his plans, including $45 million of it in his 2012-2013 revised budget.

Basically, the entire tax structure at all levels is a war on small business, a war on entrepreneurship, a war on the family farm, and a war on the ability of ordinary Americans to earn a living and support their families.  Meanwhile, the Democrats are lusting and foaming at the mouth to sink their carnivorous  fangs into those productive and entrepreneurial bourgeois that they hold in the highest contempt and vow to reduce to serfs and beggars.  A farmer really doesn't have anything of value except his dirt.  Why not just take it away from him and give it to Big Ag to grow more taxpayer subsidized GMO poison food?

Taxmageddon, the Bush Tax Cuts, the Middle Class and the AMT

The House of Representatives passed an extension of the Bush tax cuts and it will meet stiff opposition in the Democrat controlled Senate. The Democrats have defined the Bush tax cuts as exclusively being tax cuts for the rich or the 1%. It's simply not true. Because of inflation, the Alternative Minimum Tax (AMT), was created to close tax loopholes for high income earners.  However, the AMT has ensnared millions of middle class taxpayers into its orbit.

According to Forbes, the AMT is a middle class nightmare that Congress just refuses to fix.

Alternative minimum tax. This shadow tax system, created in 1969 to ensure a small number of rich folks paid at least some tax, afflicted 4.3 million upper middle class households in 2011 and in 2012 is menacing an additional 27 million...Of course it is Congress itself that created this peril. First, as part of the 1981 Reagan tax cuts, it indexed regular tax brackets, but not the AMT, for inflation. Then, in 2001, it made the Bush tax cuts look cheaper than they really were by cutting regular tax rates but not the AMT rate. Without those two bits of politically expedient tax writing, fewer than half a million families would now be paying the AMT, according to calculations by researchers at the Tax Policy Center. Those who owed AMT for 2011 had to wrestle with the 54-step Form 6251, Alternative Minimum Tax and possibly the 57-step Form 8801, Credit for Prior Year Minimum Tax, too. Sure, using software like Intuit’s TurboTax or H&R Block’s At Home makes the calculations manageable. But the AMT still makes planning difficult and punishes innocent folks with no more exotic “tax shelters” than high state and local tax deductions or lots of kids. It also raises real money—$39 billion in 2011...

The term Taxmageddon is no exaggeration.  This is how it will impact ordinary wage earners according to an Education News article titled Taxmageddon: Tax Tsunami Could Hit January 1, 2013

Roberto and Juanita have an Adjusted Gross Income (AGI) of $70,662. They are concerned about the looming Taxmageddon tax hikes and want to know how it will affect them. Their taxes will go up $4,138 next year due to Taxmageddon. After 2013, they will see a somewhat higher level of taxation (higher than the $4,138 tax hike for 2013).

2. Example #2 — Baby Boomer (AGI = $95,099)

Charles and Janet have an Adjusted Gross Income of $95,099. Due to the Taxmageddon, their taxes in 2013 will be $4,223 higher than in 2012. Each year after 2013, they will pay at least $4,200 more in taxes than they will pay in 2012. The later years will be higher than 2013 as Obamacare taxes are fully implemented. Of course, their tax bill will depend on their income in future years. 3. Example #3 — Low-Income Worker (AGI = $24,757)

Frank has an Adjusted Gross Income of $24,757. He does not consider himself a “low-income worker.” He works hard and earns a steady living but he is on a tight budget. He cannot afford a tax increase of any kind. Unfortunately, Frank will have to pay an additional $1,207 in taxes next year because Congress did not address the Taxmageddon nightmare. He will have to pay at least $1,200 each year thereafter to the IRS.

4. Example #4 — Millenial (AGI = $23,917) Teasha has an Adjusted Gross Income of $23,917. She has just started her career and is glad she was able to find a job. (Many of her friends have not been as fortunate and are living with their parents.) Teasha is also on a tight budget and wants to know what impact Taxmageddon will have on her. She will face a tax hike in 2013 of $1,099. She must pay similar tax amounts in subsequent years. 5. Example #5 — Retiree (AGI = $42,553)

Su Lin and Jun have an Adjusted Gross Income of $42,553. They are retired and live on a fixed income (mostly from Social Security and their retirement account). Because their income is fixed, it increases only slightly with cost-of-living adjustments. For their situation, they will see an increase of $857 in their 2013 tax bill. They will pay about $860 more in subsequent years than they pay in 2012.

The above cited examples are not rich folks but they are indeed middle class folks who will get clobbered with higher taxes.

The Tax Foundation did a study on the state by state impact of failing to renew the Bush tax cuts.

How the States Would Be Affected by Extension of the Bush Tax Cuts and Other Provisions

Generally, high-income states would receive the largest tax relief, because they pay the most taxes under our extremely progressive federal income tax code. They are also the states most affected by the AMT. New York, for instance, would save about $51 billion in taxes, or 8.05 percent of income, if these tax cuts were extended, including the AMT patch. That amounts to $5,452 per tax filer. More than half of that (62 percent) is due to the AMT patch. California would save about $71 billion in taxes, or 6.89 percent of income, if all tax cuts were extended. That amounts to $4,242 per tax filer. Again, more than half of that (60 percent) is due to the AMT patch.

The Bush tax cuts included a built-in temporary fix for the AMT nightmare but this temporary fix will expire if the Bush tax cuts expire on 12/31/12.

Meanwhile, we've got the liberal media claiming that the Bush tax cuts only benefitted the 1% as they clamor for more taxes on the rich when in fact they are advocating for massive taxes on the middle class. The anti-middle class Huffington Post let loose with an emotionally charged and blatantly inaccurate assessment of the Bush tax cuts while calling for higher taxes.

Expiration of Bush Tax Cuts for the 1 Percent Are a Step Forward, But Not Enough

President Obama is currently confronting mostly Republican opponents over whether to extend the Bush tax cuts to the richest 1 percent of taxpayers. Between 1979 and 2007, the richest 1 percent received three-fifths of all the income gains in the country. Most of this went to the richest 10th of that 1 percent, people with an average income of $5.6 million (including capital gains).

While it may be true that the 1% are indeed the primary recipient of income gains, that's because of the corrupt financial system, the corrupt political system, crony capitalism, corporatism, the scourge of the regulatory state and the determination of the left to forcibly impose a Soviet styled command and control economy upon America.  For the Huffington Post to deceptively assert that the Bush tax cuts only apply to those with an average annual income of $5.6 is beyond disingenuous, it's outright journalistic fraud.

The solution to our economic and fiscal nightmare is economic liberty and sound money, something shunned by both the Republicans and the Democrats.  The Republicans may be advocating for an extension of the Bush tax cuts simply because it's politically expedient in an election year but they hardly have the moral high ground on the issue.  The Republicans love cutting taxes to appease its base but they also has a severe spending disease.  Republicans truly believe that spending doesn't matter!

Republican have an Incurable Spending Disease

The Tea Party Republicans Spent More Than the Dems They Replaced.

A logical and sane person would conclude that Congress Critters should be motivated to fix the AMT problem.  However, such is not the case and the middle class routinely gets pounded with taxes despite all the spin of both parties.