Two weeks ago, Rep. Charlie Rangel (D-NY) proposed what he himself called “the mother of all tax reform plans.” I’ve asked a number of CEOs recently if the estimated $3.5 trillion tax increase over the next decade will actually pass. Every one said probably not, but, if Democrats take the White House, some variation will. Unfortunately, whatever plan we get will come atop pending hikes already in place, and I point you to the National Center for Policy Analysis (www.ncpa.org) for an excellent paper entitled “The Coming Tax Tsunami” for more on what we can expect. That includes:
The exploding AMT (2007) – Almost 19 million additional taxpayers earning less than $100,000 will be subject to the AMT, and each will pay on average nearly $3,000 more in taxes on income earned in 2007.
Medicare, the sleeping giant (2008) – Filling the projected shortfall in all parts of Medicare will require an income tax increase of 22.7 percent by 2030.
The disappearing Bush tax cuts (2009 to 2011) – The 2001 and 2003 Bush income tax cuts lowered tax rates throughout the income range and reduced capital gains taxes. But, if the provisions are not made permanent, these reduced rates will expire.
The incredible shrinking social security surplus (2017) – Currently, the payroll taxes of today’s workers pay the Social Security benefits of today’s retirees, with a “surplus” left over that is spent on other government programs. In 2017, however, Social Security expenditures are projected to exceed dedicated revenues.