A while back a news piece regarding higher taxes caught my attention. Like a lot of you, for me higher taxes rate right up there with dental appointments, colonoscopies, replacing water gaps and losing your favorite horse. Now you all know the bad parts of my spring season, but the good parts are far more numerous. Overall, it has been one of the best springs we can all remember.
As I understand it, President Bush initiated tax relief legislation in 2001 and in 2003 Congress passed it. The end of May marked the five-year anniversary of the 2003 tax relief. Now, Congress needs to extend it or make it permanent. With it being an election year, the decision remains up in the air. As we in agriculture know, tax relief is a great tool for small businesses.
If Congress does not pass the tax relief, or extend it, we will see one of the largest tax increases in history. Here are some of the figures from the White House press release:
• 116 million income tax payers will see their taxes go up by an average of $1,800.
• Married couples will once again be forced to pay more taxes as a married couple than if each were filing single. Twelve million single women with dependents will face a tax increase averaging $1,091.
• Eighteen million seniors will face a $2,181 average tax increase.
• 27 million small business owners will face an average $4,066 tax increase.
Those are staggering numbers. Kind of takes your mind off of fixing the water gaps, doesn’t it?
The White House press release goes on to say that a typical family will pay around $500 more per child in taxes and some families with children will face an average tax increase of $2,323. With all of the other high costs we are bearing these days it will make paying taxes that much harder. It went on to say a family of four earning $40,000 would see an increase of over $2,300 in taxes and a family of four earning $80,000 would see an increase of around $2,000.
If these figures provided by the White House are true – and we all know that with politics there are multiple sides – the estate tax will also continue to prove harmful. The so-called “death tax” will come back in full force. In addition the tax rate on dividends will return to a maximum of 39.6 percent and the top rate tax on long-term capital gains will climb from 15 percent to 20 percent.
They say that 75 percent of the taxpayers who are currently benefiting from the reduction in the top rate are small business owners and that means agriculture in Wyoming.
As we get close to the 4th of July congressional recess, we need to plan on visiting with our members of Congress and ask them about the proposed tax increase. I know that they are on our side and need our help in preventing this tax increase.