Hey, Remember the Economy?
At some point, we need to avoid campaign distractions and get real about America's bottom line.
(The Root) -- Ronald Reagan once said, "The best minds are not in government. If any were, business would steal them away." It's a sentiment that is especially true as we watch government declare a war on profits, a siege on success and a crusade against capitalism.
Of course, such frontal assaults on capitalism are not driving the news. Instead, it's President Obama's tryst with gay marriage and Mitt Romney's bullying of a high school student (now that's a headline -- but the story is 50 years old and Romney was himself a teenager). After all, isn't that what the unemployed and just about anyone who has struggled through this economy during the past three years wants to talk about? Certainly, those stories are a hell of lot sexier than the fact that our nation is in the red by more than $15.6 trillion (the interest payments alone on the national debt will climb to a record $800 billion a year by the end of this decade), which means your 2-year-old will owe Uncle Sam 50 grand before she gets to preschool.
Don't like that reality? Then, how about digesting the fact that while federal spending has soared to an annual average of 24 percent of gross domestic product, the ranks of the nation's poor have also increased from 39.8 million Americans in 2008 to 46.2 million in 2010.
Still not feeling reality? Then wait, there's always more:
Unless Congress acts, in 2013, the top marginal tax rate will increase to 39.6 percent, the level at which it was before the 2001 and 2003 "Bush" tax cuts. Also, the Medicare tax will increase by 0.9 percent for upper income taxpayers, to a total of 3.8 percent, pursuant to a provision in the health care bill (for the first time, the Medicare tax will apply to capital gains and dividend income as well). And those itemized deductions you love so much will also phase out -- an effective tax surcharge for upper income taxpayers ($200,000 or more in income) equal to 1.2 percent.
In addition, the tax rate on dividends is scheduled to go up from 15 percent to an effective rate of 44.8 percent, while the top capital gains tax rate will increase to 20 percent (from its current 15 percent).
Oh, and don't plan to leave whatever money you have left to your kids -- especially if you are a small business owner. The government plans to reinstate the estate tax with a $1 million exemption and 55 percent top tax rate (it's not enough that the government will tax money that has already been taxed at least once, but they take more than half of it).