No More Tax Breaks. More Taxes Are Around the Corner

Last updated on December 17, 2021

Taxpayers are already paying more taxes, thanks to a number of tax breaks that expired this year. Amidst the talk about fiscal cliff, major tax breaks enjoyed by corporate, tax breaks expiring in 2012, and more, the fact that some biggie tax breaks have already expired got buried.

Both individual and business tax breaks expired in 2011 and some are slated to expire in 2012. Some individual tax breaks on health such as employer-paid health insurance premiums will continue till 2016, but many have already seen the end. http://seattletimes.com/html/politics/2019914073_apustaxfixesglance.html takes a look at the year gone by and lists individual tax breaks that expired this year.

“- Relief from the Alternative Minimum Tax. The tax is designed to ensure that wealthy people can’t use tax breaks to avoid paying any federal taxes. However, it was never indexed for inflation, so Congress routinely adjusts it to keep it from imposing hefty tax increases on millions of middle-income families. Cost: $132 billion.

– State and local sales tax deduction. Taxpayers can take this itemized deduction instead of deducting state and local income taxes. It is geared for people who live in states without state income taxes: Alaska, New Hampshire, Tennessee, Florida, South Dakota, Washington, Nevada, Texas and Wyoming. Cost: $4.4 billion.

– A deduction of up to $4,000 for qualified higher education expenses: Cost: $4.2 billion.

– A tax credit for improvements to make homes more energy efficient. Cost: $2.4 billion.

– A provision that allows tax-free distributions from Individual Retirement Accounts, when used for charitable donations. People older than 70-and-a-half can make tax-free withdrawals of up to $100,000 a year from IRAs. Cost: $1.3 billion.

– A deduction for mortgage insurance premiums. Cost: $1.3 billion.

– A deduction of up to $250 for teachers who buy classroom supplies with their own money. Cost: $462 million.”

There has been criticism on the tax breaks businesses get, especially at the time when the economy is in trouble. Large companies making billions are under the fire for saving millions on taxes because of tax breaks when they could easily do without the tax cuts. With the expiring of many business tax breaks this year, businesses are paying more than last year. Seattle Times shares the facts:

“- A tax credit for manufacturers and other businesses that invest in research and development. Cost: $14.3 billion.

– A tax break that allows restaurants and retail stores to write off the cost of certain capital improvements over 15 years instead of 39 years. Cost: $3.7 billion.

– An exemption that allows banks, insurance companies and other financial firms to shield the profits of foreign subsidiaries from being taxed by the U.S. Cost: $11.2 billion.

– A $1 per-gallon tax credit for businesses that use or sell biodiesel, a renewable fuel for diesel engines derived from vegetable oils and animal fats. Cost: $2.2 billion.

– A tax credit of up to $2,400 for businesses that hire people who receive benefits from a variety of government programs, including disability benefits and Temporary Assistance to Needy Families. Cost: $1.8 billion.”

There are more tax breaks that will soon join the growing list of veteran tax breaks with the end of the year. Taxpayers will be paying more, but exactly how much more is yet to be seen.