Tags: Expect | Tax | Increases | Unless | Congress | Acts

Expect Tax Increases – Unless Congress Acts

Monday, 10 April 2006 12:00 AM

WASHINGTON -- Congress has failed to act on a bevy of automatic tax increases that will force millions of Americans to cough up more money to Uncle Sam – including automatic increases set for capital gains, personal income and dividends.

Republican lawmakers on Capitol Hill failed to reach an agreement on tax and budget measures before adjourning for Easter recess. As a result, timely legislation to extend low rates on investments and prevent a $31 billion tax increase on more than 15 million households was delayed and potentially lost.

"The date of April 15 has a lot to do with it," Senate Finance Committee Chairman Charles Grassley, R-Iowa, said. "You know - good news at tax time."

Grassley and House Ways and Means Committee Chairman Bill Thomas, R-Calif., have been negotiating for months over how to formulate a $70 billion tax-cutting measure authorized by last year's budget.

Senate Majority Leader Bill Frist, R-Tenn., and the administration had urged lawmakers to reach agreement before the upcoming tax return filing deadline. The delay raises the possibility that Republicans won't be able to pass a budget resolution this year.

RSC chairman, Rep. Mike Pence, R-Ind., and RSC Budget and Spending Taskforce chairman, Rep. Jeb Hensarling, R-Texas, point out that although certain tax increases have already occurred in the current year, tax returns for 2006 are not filed until the spring of 2007, so the increases can still be reversed without taxpayers being affected by them.

For 2006 the exemption for the Alternative Minimum Tax (AMT) will decrease from $40,250 to $33,750 for single filers and from $58,000 to $45,000 for married couples filing jointly. Taxpayers in states with no state income tax will not be allowed to deduct their sales taxes from their federal income tax.

In 2008 the section 179 small business expensing cap will decrease from $100,000 to $25,000, and the definition of a small business will decrease from $400,000 to $200,000.

There are many changes slated for 2009:

There are even more projected for 2011:

Following a pledge to keep the American taxpayer informed, the RSC says it will update its listing of unaddressed tax increases upon enactment of the Tax Relief Extension Reconciliation Act (H.R. 4297), the Pension Protection Act (H.R. 2830), or any other legislation enacted this spring that impacts the increases.

Talks may resume on the tax measure later this month, said Frist.

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WASHINGTON -- Congress has failed to act on a bevy of automatic tax increases that will force millions of Americans to cough up more money to Uncle Sam - including automatic increases set for capital gains, personal income and dividends. Republican lawmakers on...
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Monday, 10 April 2006 12:00 AM
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