What the hell happened. I was trying to get a slant on how and if keyboard manufacturers were going to survive with the new tax hikes, and the thread quickly turned into a political and racial football. Here's the Kiplinger letter I received. Read it for yourselves, then you'll understand my concern for small business owners, a category which those of us that perform for a living fit into.


This came from the Senior Tax Editor for Kiplinger Letters

Subject: This Will be Difficult For All of Us



In just three months, on January 1, 2011, the largest tax hikes in the history of America will take effect.

They will hit families and small businesses in three great waves.

On January 1, 2011, here's what happens... (read it to the end, so you see all three waves)...


First Wave:


Expiration of 2001 and 2003 Tax Relief

In 2001 and 2003, the GOP Congress enacted several tax cuts for investors, small business owners, and families.

These will all expire on January 1, 2011.


Personal income tax rates will rise.

The top income tax rate will rise from 35 to 39.6 percent (this is also the rate at which two-thirds of small business profits are taxed).

The lowest rate will rise from 10 to 15 percent.

All the rates in between will also rise.


Itemized deductions and personal exemptions will again phase out, which has the same mathematical effect as highermarginal tax rates.


The full list of marginal rate hikes is below:

The 10% bracket rises to an expanded 15%


The 25% bracket rises to 28%


The 28% bracket rises to 31%


The 33% bracket rises to 36%


The 35% bracket rises to 39.6%

Higher taxes on marriage and family.

The "marriage penalty" (narrower tax brackets for married couples) will return from the first dollar of income.

The child tax credit will be cut in half from $1000 to $500 per child.

The standard deduction will no longer be doubled for married couples relative to the single level.

The dependent care and adoption tax credits will be cut.

The return of the Death Tax.

This year only, there is no death tax. (It's a quirk!) For those dying on or after January 1, 2011, there is a 55 percent top death tax rate on estates over $1 million. A person leaving behind two homes, a business, a retirement account, could easily pass along a death tax bill to their loved ones. Think of the farmers who don't make much money, but their land, which they purchased years ago with after-tax dollars, is now worth a lot of money. Their children will have to sell the farm, which may be their livelihood, just to pay the estate tax if they don't have the cash sitting around to pay the tax. Think about your own family's assets. Maybe your family owns real estate, or a business that doesn't make much money, but the building and equipment are worth $1 million. Upon their death, you can inherit the $1 million business tax free, but if they own a home, stock, cash worth $500K on top of the $1 million business, then you will owe the government $275,000 cash! That's 55% of the value of the assets over $1 million! Do you have that kind of cash sitting around waiting to pay the estate tax?


Higher tax rates on savers and investors.

The capital gains tax will rise from 15 percent this year to 20 percent in 2011.

The dividends tax will rise from 15 percent this year to 39.6 percent in 2011.

These rates will rise another 3.8 percent in 2013.

Second Wave:

Obamacare

There are over twenty new or higher taxes in Obamacare. Several will first go into effect on January 1, 2011. They include:

The "Medicine Cabinet Tax"

Thanks to Obamacare, Americans will no longer be able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin).


The "Special Needs Kids Tax"

This provision of Obamacare imposes a cap on flexible spending accounts (FSAs) of $2500 (Currently, there is no federal government limit). There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children.

There are thousands of families with special needs children in the United States, and many of them use FSAs to pay for special needs education.

Tuition rates at one leading school that teaches special needs children in Washington, DC (National Child Research Center) can easily exceed $14,000 per year.

Under tax rules, FSA dollars can not be used to pay for this type of special needs education.


The HSA (Health Savings Account) Withdrawal Tax Hike.

This provision of Obamacare increases the additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent.

Third Wave:

The Alternative Minimum Tax (AMT) and Employer Tax Hikes

When Americans prepare to file their tax returns in January of 2011, they'll be in for a nasty surprise-the AMT won't be held harmless, and many tax relief provisions will have expired.

The major items include:

The AMT will ensnare over 28 million families, up from 4 million last year.

According to the left-leaning Tax Policy Center, Congress' failure to index the AMT will lead to an explosion of AMT taxpaying families-rising from 4 million last year to 28.5 million. These families will have to calculate their tax burdens twice, and pay taxes at the higher level. The AMT wascreated in 1969 to ensnare a handful of taxpayers.

Small business expensing will be slashed and 50% expensing will disappear.

Small businesses can normally expense (rather than slowly-deduct, or "depreciate") equipment purchases up to $250,000.

This will be cut all the way down to $25,000. Larger businesses can currently expense half of their purchases of equipment.

In January of 2011, all of it will have to be "depreciated."

Taxes will be raised on all types of businesses.

There are literally scores of tax hikes on business that will take place. The biggest is the loss of the "research and experimentation tax credit," but there are many, many others. Combining high marginal tax rates with the loss of this tax relief will cost jobs.

Tax Benefits for Education and Teaching Reduced.

The deduction for tuition and fees will not be available.

Tax credits for education will be limited.

Teachers will no longer be able to deduct classroom expenses.

Coverdell Education Savings Accounts will be cut.

Employer-provided educational assistance is curtailed.

The student loan interest deduction will be disallowed for hundreds of thousands of families.

Charitable Contributions from IRAs no longer allowed.

Under current law, a retired person with an IRA can contribute up to $100,000 per year directly to a charity from their IRA.

This contribution also counts toward an annual "required minimum distribution." This ability will no longer be there.

And worse yet?

Now, your insurance will be INCOME on your W2's!

One of the surprises we'll find come next year, is what follows - - a little "surprise" that 99% of us had no idea was included in the "new and improved" healthcare legislation . . . the dupes, er, dopes, who backed this administration will be astonished!

Starting in 2011, (next year folks), your W-2 tax form sent by your employer will be increased to show the value of whatever health insurance you are given by the company. It does not matter if that's a private concern or governmental body of some sort.

If you're retired? So what... your gross will go up by the amount of insurance you get.

You will be required to pay taxes on a large sum of money that you have never seen. Take your tax form you just finished and see what $15,000 or $20,000 additional gross does to your tax debt. That's what you'll pay next year.

For many, it also puts you into a new higher bracket so it's even worse.

This is how the government is going to buy insurance for the 15% that don't have insurance and it's only part of the tax increases.

Not believing this??? Here is a research of the summaries.....

On page 25 of 29: TITLE IX REVENUE PROVISIONS- SUBTITLE A: REVENUE OFFSET PROVISIONS-(sec. 9001, as modified by sec. 10901) Sec.9002 "requires employers to include in the W-2 form of each employee the aggregate cost of applicable employer sponsored group health coverage that is excludable from the employees gross income."

- Joan Pryde is the senior tax editor for the Kiplinger letters.
- Go to Kiplingers and read about 13 tax changes that could affect you. Number 3 is what is above.

Gary

Whatever I think about our President, the fact that he is partially Black has nothing to do with it, and I am personally insulted to be accused of it. It is utter bullshit. I DID respect you Chas, but no longer.
DonM

Nigel the lock please .

I don't care if he is green...his policies and agenda has put the United States of America in a direction that is NOT what this country is all about and he is a train wreck.

Lee S.

Hi

- or the bin.
This is NOT a discussion gruop obout US politics!

Jørgen

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The Unofficial YAMAHA Keyboard Resource Site

Perfect example of why politics and religion should be avoided in music forum discussions.

Don I agree with you.....I also hope Nigel totaly deletes this topic fast....no need for it !!

No, not quite...

Its only 55% on those estates worth more than 3 Million dollars...and after you've exhausted all the exemptions a person/business may qualify for. Further, the first million is exempt...

We can debate whether the death tax is a good thing or not, but the statement in that letter is factually wrong.

The tax rates per UCC Code 26:

The tentative tax is based on the tentative tax base, which is the sum of the taxable estate and the "adjusted taxable gifts" (i.e., taxable gifts made after 1976). The federal estate tax is repealed for one year in 2010 and will return to 2001 rates and rules in 2011. For decedents dying after December 31, 2010, the tentative tax will be calculated by applying the following tax rates[19]:

For amounts not greater than $10,000, the tax liability is 18% of the amount.
For amounts over $10,000 but not over $20,000, the tentative tax is $1,800 plus 20% of the excess over $10,000.
For amounts over $20,000 but not over $40,000, the tentative tax is $3,800 plus 22% of the excess over $20,000.
For amounts over $40,000 but not over $60,000, the tentative tax is $8,200 plus 24% of the excess over $40,000.
For amounts over $60,000 but not over $80,000, the tentative tax is $13,000 plus 26% of the excess over $60,000.
For amounts over $80,000 but not over $100,000, the tentative tax is $18,200 plus 28% of the excess over $80,000.
For amounts over $100,000 but not over $150,000, the tentative tax is $23,800 plus 30% of the excess over $100,000.
For amounts over $150,000 but not over $250,000, the tentative tax is $38,800 plus 32% of the excess over $150,000.
For amounts over $250,000 but not over $500,000, the tentative tax is $70,800 plus 34% of the excess over $250,000.
For amounts over $500,000 but not over $750,000, the tentative tax is $155,800 plus 37% of the excess over $500,000.
For amounts over $750,000 but not over $1,000,000, the tentative tax is $248,300 plus 39% of the excess over $750,000.
For amounts over $1,000,000 but not over $1,250,000, the tentative tax is $345,800 plus 41% of the excess over $1,000,000.
For amounts over $1,250,000 but not over $1,500,000, the tentative tax is $448,300 plus 43% of the excess over $1,250,000.
For amounts over $1,500,000 but not over $2,000,000, the tentative tax is $555,800 plus 45% of the excess over $1,500,000.
For amounts over $2,000,000 but not over $2,500,000, the tentative tax is $780,800 plus 49% of the excess over $2,000,000.
For amounts over $2,500,000 but not over $3,000,000, the tentative tax is $1,025,800 plus 53% of the excess over $2,500,000.
For amounts over $3,000,000, the tentative tax is $1,290,800 plus 55% of the excess over $3,000,000.

Although the above tax table looks like a system of progressive tax rates, there is in 2011 a unified credit against the tentative tax which effectively eliminates any tax on the first $1,000,000 of the estate.

http://en.wikipedia.org/wiki/Death_tax#The_.22Death_Tax.22_neologism



Once again, wrong as wrong can be. You can't get your info from a chain email or ill-informed professionals.

Everybody take a chill pill. They sky isn't falling, I promise.
http://www.irs.gov/newsroom/article/0,,id=228881,00.html (I actually called the IRS, it took me 7 minutes to find out this was factually wrong.)

http://factcheck.org/2010/05/health-care-law-and-w-2-forms/

http://www.snopes.com/politics/taxes/hr3590.asp

Its NOT taxable income, period. NOTE: Some "cadillac plans, whose plan value is upwards of 25K a year (the average family of 4 policy is about 14K, so we're talking twice as much...)MAY be taxed at the amounts beyond the average, but there are exemptions for high risk professions like fire fighters and police, etc...

Retirees are most certainly NOT going to pay taxes on it.


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Bill in Dayton


[This message has been edited by Bill in Dayton (edited 10-29-2010).]

Gary-

This is the actual article from Kiplinger:
http://www.kiplinger.com/businessresourc...e-way.html?si=1

Here's #3 from the actual Kiplinger's website:

"3. A requirement that businesses include the value of the health care benefits they provide to employees on W-2s. Although this was originally required beginning with W-2s for 2011 – those issued early in 2012 – in October, a one-year delay was announced. Employers may voluntarily report the value of health benefits they provide on 2011 W-2s, but this will not be mandatory until the 2012 forms. The amount reported is not considered taxable income."


It seems far less doom and gloom than the one you posted.

Did you get your article in the form of an email by chance? Can't trust those buddy...

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Bill in Dayton

[This message has been edited by Bill in Dayton (edited 10-29-2010).]

Bill,

From what I was led to believe, and some of your statement tends to lean in that direction, is that in 2012 health insurance paid by the employer, WILL be considered taxable income. Currently, it is NOT. But, this, like most taxes, is subject to change. Only time will tell. I won't hold my breath on any of this, and as I stated earlier, the small businesses will be slammed until they're out of business.

Gotta' go to work (while I still have work.)

Gary