Congress Fails to Act on Tax Increases

by Veronique de Rugy

Isn’t it a little careless that Congress adjourned without addressing the potential tax increases we are all facing? If Congress does nothing on taxes by the end of the year, according to the Hill,

— The estate tax will return to pre-2001 levels, socking estates worth more than $1 million with a 55 percent tax.

— The capital gains tax on most assets will jump from 15 percent to 20 percent.

— Dividends currently taxed at 15 percent will skyrocket to individual tax rates that go as high as 39.6 percent.

— The Making Work Pay tax break will cease to exist.

— The Alternative Minimum Tax will hit the middle class for 2010 tax returns.

— A slew of tax breaks that expired last year, including credits for research and development expenses and relief for college tuition, will not be available for 2010 tax returns.

— The Child Tax Credit will revert from $1,000 to $500.

When combined with inaction on the Bush tax cuts affecting marginal rates, taxpayers would be hit with a tax increase that easily tops $4 trillion over the decade if all the tax issues are untouched. Next year’s increase alone would amount to over $200 billion, according to Republicans on the House Ways and Means Committee.

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