Democrat child abuse
Image via WikipediaWe don’t want to think about it, let alone read about it, but higher taxes are on the way.There is much more.
Two tax hikes were passed this year and another is likely. These new taxes are supposedly being levied just on the rich. But over time, they will hit most of our kids. And they are just the beginning of our children’s and grandchildren’s tax trauma, given Congress’s inability to curb spending.
The two increases are for Medicare. They were buried inside the 2,000-page health-care bill and take effect in 2013. Earn more than $250,000 ($200,000 if single) and you’ll face an extra 0.9 percentage-point FICA tax for Social Security. And once your income passes this level, you’ll pay a 3.4 percent tax on your asset income.
These thresholds aren’t indexed for inflation, let alone growth in real incomes. So these taxes on “the rich” will eventually hit everyone as nominal incomes rise with inflation and productivity. Within 20 years most earners will be paying these new Medicare taxes.
The Alternative Minimum Tax also has thresholds that aren’t indexed for inflation. Congress has raised these levels to keep the share of taxpayers affected constant. But there is no guarantee it will continue to do so.
There are two other income-tax thresholds that haven’t changed since 1984. These are the income levels at which the first 50 percent and then 85 percent of our Social Security benefits are subject to taxation. In 2000, only 22 percent of recipients were above one of these thresholds. Now it’s 39 percent. When today’s children retire, virtually all will pay taxes on 85 percent of their benefits.
Take a current 10-year-old who reaches the 25 percent tax bracket. She’ll hand back 21 percent (0.25 times 0.85) of her Social Security benefit in income taxes. To add injury to injury, President Barack Obama’s National Commission on Fiscal Responsibility and Reform likely will recommend a 20 percent benefit cut through a three-year increase in Social Security’s full retirement age.
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This is just a few of the reasons that Democrat big spending is being described as the generational theft acts. It is starting to have a political impact in the election and will probably help the Republicans dial back some of the spending.
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