Taxmagedd-on with it already
“Taxmageddon?”
By now you”™ve heard the term describing the $500 billion tax increase that is on the books at the end of 2012. As the Heritage Foundation notes, under current law, five of 18 new tax hikes under Obamacare kick in even as the Bush and payroll tax cuts are set to expire along with the Alternative Minimum Tax patch.
Under the Affordable Care Act, a 3.8 percent surtax looms on income over $250,000, which Heritage Foundation researcher Curtis Dubay dubs “the most economically damaging tax in the law” and the one that raises the most revenue.
“A tax increase the size of Taxmageddon for just one year is simply unprecedented,” Dubay wrote in an issue brief last month. “By comparison, all the tax increases in Obamacare ”“ itself an enormous tax increase ”“ raise $502 billion over 10 years, which is almost as much as Taxmageddon will increase taxes just in 2013.”
Given that thorny little problem of a November election, we doubt Congress and Obama will have much of a problem tabling Taxmageddon to a quick fix next year, along with another looming debt crisis and assorted other fiscal woes.
But a constantly shifting tar pit of tax policy is getting everyone stuck, to include CPAs according to a White Plains, N.Y., tax expert who testified at a U.S. Senate hearing last week on the issue.
“From a practical standpoint, or from the standpoint of a CPA professional who is dealing with taxpayer issues daily, there is a need to address the varied types of taxes and how they impact the taxpayer and the tax collector,” said Sanford Zimman, who is national tax chair of the National Conference of CPA Practitioners. “Individuals are left to battle with each jurisdiction that wants a piece of the action and their tax dollars ”¦ Businesses which have nexus in multiple jurisdictions are also potentially subject to double or triple taxation.”
At the same hearing, a Tax Foundation researcher tangled with a senator on the issue of tax simplification, recounting the episode in a blog post that day, noting 9,600 different sales taxes alone nationally.
“States are moving away from simplicity, away from uniformity,” Joe Henchman said. “We have trouble keeping up with it all and we”™re a tax policy think tank ”¦ not a small business.”