Whatever you want to call it, the time to pay the piper is here. Tax reform has been pushed and patched for over a decade now, and if the people in Washington can't come to a decision, then we all lose. So what is in store if Washington can't get its act together by December 31, 2012?
· Individual income tax brackets will change to 15, 28, 31, 36 and 39.6 percent, from the present levels of 10, 15, 25, 28, 33 and 35 percent.
· The long-term capital gains tax rate will go from15% to 20%
· Dividends will go from being taxed at a maximum of 15% to being ordinary income, taxed as high as 39.6%
· The Alternative minimum tax (AMT), designed to ensure the very wealthy pay income taxes will capture a huge number of upper middle class taxpayers, all because the AMT does not adjust with inflation (how hard would that be to do Congress??)
· Elimination of the cut in the payroll taxes. Workers currently pay 4.2 % (a temporary reduction on the usual 6.2%)
· Estate tax / Gift Tax/ GST Tax exemption amount will go down from $5,120,00 to $1 million and the estate and gift tax top rate will go from 35% to 55%.
· $1.2 trillion in across-the-board cuts in federal spending since Congress couldn't come up with a deficit-cutting deal in January 2012. Economists fear this could be saying hello to that double dip recession.
· End of extended unemployment benefits.
· A double-digit drop in Medicare reimbursements which could cause doctors to cease treatment of those over 65.
· And don't forget that niggling $16.4 trillion debt ceiling we keep pushing up.
Image courtesy of [digitalart] / FreeDigitalPhotos.net