Underhanded or Incompetent; Tax Increases Cost Middle America This Year!

Posted by on Oct 12th, 2010 and filed under Congress, Economy, Government Spending, Politics. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry from your site

It’s not just the Bush Tax Cuts…Obama has already hit you with thousands in new taxes that may not even be aware of…yet.

Contrary to Obama’s pledge not to raise taxes on the those making less than $250,000.00, a rate increase is already in effect, as of December 31, 2009, which will result in nearly 30 million working class Americans owing thousands more taxes, this year. 

For the past decade, a “fix” has been passed annually to adjust the AMT or Alternative Minimum Tax threshold, for inflation. However, under Obama, the “fix” expired on December 31, 2009 and has not been renewed. Unless Congress passes the annual “fix” before December 31, 2010, nearly 30 million Americans will be hit with the tax increase. But hot on campaign trails, politicians are focused on their own careers and not on saving the American tax payer. 

Who will the increase hit? Well, the Congressional Budget Office suggests that those affected will include:

  •  3% of households earning under $50,000.00
  •  40% of households making between $50,000.00 and $100,000.00 
  • 50% of households making between $100,000.00 and $200,000.00 
  • 15% of households making between $200,000.00 and $500,000.00

Actually, nearly every married couple, filing jointly, making a combined income of between $100,000.00 and $500,000.00 will be hit with an average increase of nearly $4,000.00.

But is the increase an underhanded way to increase taxes without actually legislating any increases? A game of semantics? A case of, “I said that “I” wouldn’t raise taxes, not that taxes wouldn’t increase.” Or is this proof of incompetence? After all, Congress and the President have had ten months to extend what ever other President, for the past decade has extended. Are politicians too consumed with playing politics and not with actually running the government?

The Alternative Minimum Tax was passed in an era that in many ways mirrors our current economic, social, and political situations. In the late 1960’s as the poverty rate reached nearly 20%, President Lyndon Johnson struggled to finance his “Great Society” concept. A vast socialist program designed to greatly expand the power of the government and increase social welfare programs. Just another revamp of Roosevelt’s “New Deal,” the “Great Society” further divided Republicans and Democrats over their role in government.  

But, as Johnson’s popularity rating dropped to 38%, largely over his stance on the Vietnam War, even Democrats began to flee Johnson. An expensive, unpopular war, coupled with domestic unrest meant that Johnson had difficultly convincing the Congress and the public that his massive tax increases for massive welfare programs was a positive.

However, in April of 1969, a New York Times article entitled “How 381 Super-Rich Americans Managed Not to Pay a Cent in Taxes Last Year” emboldened Johnson and his Democrat supporters and a new campaign to tax the rich was launched. Though the “facts” in the article were disputed, Democrats pressed home the idea that the wealthy were not paying their fair share in taxes and attempted to create a class war against the rich. The media, jaded by constant coverage of race riots and Vietnam, found new villains to pursue, successful Americans and their companies.

Similarly, as Obama’s ratings drop, he is faced with an inability to fund his version of Roosevelt’s “New Deal.” After loosing support from the liberals who backed his de-militarization stance, blacks to whom he promised reparations, and a whole host of special interest groups, all who feel slighted that he has failed to keep campaign promises, Obama turned to a malleable media to create a scapegoat.

Wall Street, successful Americans, military veterans, elderly Americans, homeowners, whites, conservatives, and of course George Bush, have all taken a turn at being the focus of Obama and liberal blame. Unfortunately, all too often, voters from all parties jump to point fingers without the facts.

This is exactly how Johnson was able to pass sweeping taxes and it looks to be the way that Obama can pass his taxes as well. Enacted in the final moments of the Johnson Administration, the Alternative Minimum Tax was promoted as a surety that the wealthy and large corporations would no longer be able to use loopholes, exemptions, and deductions to effectively pay zero in taxes. Of course, the income considered wealthy in 1969 and today are radically different sums, however, the ATM hasn’t been adjusted for inflation. So, for the past decade, a “fix” has been issued to adjust the ATM income threshold and save millions of working class Americans from being penalized. However, no fix has been issued for the ATM this year, which will result in middle income and in some cases low income families paying the ATM, designed to penalize the wealthy of yesteryear.

The real question of course is why? Can it truly be a case of incompetence?  Has Obama filled his house with so many advisors who have no experience outside of academia that the business of governing the country simply isn’t being handled properly?  Or is this the last great push to socialize the country? By taxing Americans into poverty while controlling the industry, financial markets, housing markets, and health care, are we forced into dependency on the government?  And if so…..what is to be done?

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