I don’t want your blood, I don’t want your fear, to fill you with regret for all these wasted years. No I, I won’t die, I will rise again, all through these lonely nights. Ok, I don’t listen to every song that I use lyrics from, but these from Culture Club’s Armageddon seem to represent the feelings that many may be having over the upcoming Taxmageddon.
I bring up the idea of Taxmageddon because the current presidential campaign is really demagoging the issue of tax policy. On one side, the Obama campaign is suggesting that the Republicans want to enact massive tax cuts for the rich, while the Democrats want to tax the rich and reduce taxes for the masses. On the other hand, the Romney campaign is suggesting that the Democrats want to enact massive tax increases, in contrast to their calls for tax cuts. In reality neither side is arguing this accurately or honestly.
The reality is, no matter which of the (currently 13) candidates running for President of the United States is declared the winner in November, he or she will be inaugurated just 3 weeks after a significant tax increase goes into effect. And this tax increase will be across the board, taxing rich and poor, individuals and corporations all at higher rates.
In fact according to the Congressional Budget Office, if nothing is done prior to the end of the year, the expiring tax provisions will lead to $399 billion in additional federal taxes beginning in 2013 (an overall tax increase of just over 1.5 percent). These include provisions that limit the reach of the alternative minimum tax to middle class taxpayers, provisions that increase individual income tax rates and reduce deductions across the board, provisions that eliminate the “marriage penalty,” provisions that grant a 2 percentage-point cut in the payroll tax, and dozens of changes to the corporate tax code that will eliminate depreciation expenses for items like research and development.
In addition, if the Supreme Court allows it, dozens of new taxes included in the health care legislation will go into effect at the end of this year.
So the coming Taxmageddon will make much of the campaign rhetoric moot. No matter who becomes the next president, the fact is that he or she will preside over a huge tax increase, nearly all of which will fall on middle and lower income people. In fact, the CBO suggests that the elimination of the payroll tax holiday alone will increase taxes on all working people by $95 billion (about 24 percent of the total tax increase). The Administration’s plan to tax the “rich” (which for the most part will happen as part of Taxmageddon) will be equal to a much smaller $70 billion or about 17 percent of the total tax increase that will occur on December 31.
The bottom line is that whoever becomes President in January of next year will inherit a federal government that taxes all of us more than the current one does, and whoever that person is, be they Republican, Democrat, Socialist or Libertarian they will lead a government that continues to want your blood, want your fear, and likely fill you with regret for all these wasted years.