It is remarkable that the Democratic Congress has adjourned without taking any action with regard to the tax increases that will occur on January 1, 2011. No doubt the Democrats expect they will slink back into Washington after the election and selectively block tax increases on behalf of their favored constituencies. Still, it is rather stunning that they are willing to face the voters in four weeks with trillions of dollars in tax increases pending. The Hill sums up what is at stake:
If Congress does nothing on taxes by the end of the year:
– 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.
They couldn’t adopt a budget, and now they can’t make up their minds about trillions of dollars in taxes. It is hard to overstate the disarray of the Obama/Pelosi/Reid Democrats. They are unfit to govern. Remember that on November 2.