With Congress abandoning plans to vote on taxes before Election Day, the clock is ticking toward Dec. 31 and the expiration of the Bush tax cuts.
Though President Barack Obama says he wants to extend so-called "middle-class" tax cuts, the administration's plan would still mean billions more in taxes and millions of lost jobs nationally.
According to calculations by the conservative Heritage Foundation, between 2011-2020, Florida would --
- Lose, on average, 40,418 jobs annually.
- Lose, per household, $17,696 in total disposable personal income.
- See total individual income taxes increase by $33.3 billion.
Assessing the impact on just one Florida congressional district -- Rep. Bill Posey's 15th CD -- Heritage estimates that the east-central region of the state would suffer an average loss of 1,733 jobs per year from 2011-2020 and see an aggregate tax increase of more than $1.3 billion.
The employment losses are over and above what the region is expected to incur as the Obama administration phases out the space shuttle program and considers shifting NASA jobs away from the Kennedy Space Center.
Posey, a first-term Republican congressman from Rockledge, said, Higher taxes coupled with wasteful spending and more regulation is not a recipe for job growth.
"Stopping this massive tax increase is an important step in the right direction," Posey said.
Obama's bid to extend only a portion of the Bush-era tax cuts -- those affecting households earning more than $250,000 -- may not help. Economists say many small businesses, which file as individual earners, would be hurt and that job creation would suffer as a result.
If Congress passes the presidents tax plan, the following tax hikes would kick in:
- Marginal income tax rates rise for families and small businesses making more than $250,000 a year.
- The 35 percent bracket rises to 39.6 percent.
- The 33 percent bracket rises to 36 percent.
- Capital gains rate rises from 15 percent to 20 percent.
- Dividends tax rate rises from 15 percent to 20 percent.
- Certain exemptions and itemized deductions for high-income taxpayers are eliminated.
- The estate tax would jump from 0 percent to as high as 55 percent.
On the upside:
- Filers earning $214,200-$237,200 would see their marginal rates drop from 33 percent to 28 percent (the same as those earning $140,550-$214,200).
- Alternative Minimum Tax (AMT) threshold would be indexed for inflation.
- Marriage penalty would be reduced.
- Child tax credit increased from $500 to $1,000.
But even Obama's modest compromise for "middle class relief" is no sure bet for passage amid the hyper-partisan maneuvering on Capitol Hill.
Congressional Republicans, and a few moderate Democrats, insist that all of the cuts be extended. Unsure that they had the votes to pass the president's plan in the heat of the fall campaign -- and nervous about the political repercussions if they did -- Senate Democratic Majority Leader Harry Reid and House Speaker Nancy Pelosi punted until after the November elections.
If no action is taken and the cuts expire, the nation will face an estimated $4 trillion tax increase -- the largest in history.
Whatever happens, financial advisers recommend that taxpayers consider taking their lumps this year because it's unlikely that the rates will be going down next year.
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Contact Kenric Ward at kward@sunshinestatenews.com or at (772) 801-5341.
