Tuesday, January 1, 2013

What's With All the Rejoicing? Taxes Are Still Going Up by 1% of GDP on All Working Americans

Despite all the celebration, none us have avoided a tax increase.  What?  You don't make anywhere near $450,000 a year?  Well unfortunately the Bush Tax Cuts were only about a third of what I liked to call Taxmaggedon though it probably got 100% of the media coverage.  People completely seemed to forget the payroll tax was scheduled to go up as well, by 2% on the first $110,000 of income, which makes it quite a regressive tax (rich people actually pay a smaller percentage than people making less).  This amounts to an estimated $124 billion in tax increases in a single year, just from the payroll tax.  Just by itself it is the largest tax hike in over 40 years as a % of GDP.  When you take into account the Obamacare tax that has now become law ($22 billion in 2013) and the tax increase for those making over $450,000 a year (unclear but probably around $50 billion) we are talking about an increase of 1.3% of GDP, the largest in at least 60 years! The economic impact may be anywhere from 1.3-3.9% of GDP, which is enough to get us into another recession

Way to go Washington, DC, you just screwed the American people and the economy.  And why are we supposed to be happy about it?

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