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WASHINGTON — Republicans are calling it "Taxmageddon," thebig tax increase awaiting nearly every American family at the endof the year, when a long list of tax cuts are scheduled to expireunless Congress acts. It would be, GOP leaders in Congress say again and again, "thelargest tax increase in American history." Except it wouldn't be, not when you take into account populationgrowth, rising wages, and most importantly, the size of the U.S.economy. When those factors are taken into account, the largest taxincreases were those imposed to help pay for World War II –back when the U.S. raised additional revenue to pay for warsinstead of simply borrowing. Nevertheless, it is an exaggeration that has proved too temptingfor top Republican leaders in Congress: _ "Any sudden tax hike would hurt our economy, so this fall –before the election – the House of Representatives will voteto stop the largest tax increase in American history," HouseSpeaker John Boehner, R-Ohio, said in a May 15 speech inWashington. _ "Millions are unemployed and millions more are underemployed andthe country is facing the largest tax hike in history at the end ofthe year," Senate Republican Leader Mitch McConnell said Thursdayin a speech on the Senate floor. _ "This would be, without any exaggeration, the largest taxincrease in American history," said a May 17 letter from 41Republican senators to Senate Majority Leader Harry Reid. Republican presidential candidate Mitt Romney gives the claim adifferent twist, applying it to President Barack Obama's budgetproposal for next year. That's an even bigger exaggeration. THE FACTS: A huge collection of tax cuts are scheduled to expire atthe end of the year, affecting families at every income level andbusinesses of many stripes. Many of the tax cuts were first enactedunder former President George W. Bush and extended under Obama. If Congress does nothing, income tax rates would go up, estatetaxes and investment taxes would increase and the alternativeminimum tax would hit millions of middle-income people. A temporarypayroll tax cut that has been of benefit to nearly every wageearner in 2011 and 2012 would expire, costing the average family anadditional $1,000 a year. In addition, dozens of other tax breaks for businesses andindividuals that are routinely renewed each year already expired atthe end of 2011. Congress was expected to renew many of them byJanuary, so taxpayers could still claim them on their 2012 taxreturns. If Congress fails to act, businesses would lose a popular taxcredit for research and development as well as generous tax breaksfor investing in new plants and equipment. Individuals would losefederal tax breaks for paying local sales taxes, buying energyefficient appliances and using mass transit. In all, federal taxes would increase by about $423 billion nextyear, according to figures from the nonpartisan CongressionalBudget Office and the Joint Committee on Taxation, the officialscorekeepers for Congress. Combined with federal spending cuts scheduled to take effect nextyear, the combination of tax increases and spending cuts wouldprobably send the U.S. economy back into recession, according to arecent CBO study. Still, the tax increases would pale in comparison to those imposedto help finance World War II. Before the 1940s, the individual income tax applied to only a smallpercentage of the population. By the end of war, the income tax waslevied on most working people, with a top tax rate of 94 percent onincome above $200,000. By comparison, the current top rate is 35 percent, on taxableincome above $388,350. If Congress does nothing, the top rate wouldreturn to 39.6 percent next year – the same rate that was inplace for most of the 1990s. In dollars, next year's tax hikes would be the biggest. But thesize of the economy is 80 times bigger than it was in the 1940s,which is why economists usually measure taxes and governmentspending as a share of the U.S. economy. The 1942 tax increase represented more than 5 percent of the U.S.economy, as measured by the gross domestic product, or GDP. The1941 tax increase was 2.2 percent of GDP, according to a TreasuryDepartment paper published in 2006. Next year's looming tax increase, by comparison, would represent2.6 percent of GDP – a huge tax hike but not the biggest. Measured another way, the 1942 tax hike increased federal revenueby a whopping 71 percent, according to the Treasury Departmentpaper. The 1941 tax hike increased federal revenue by 32 percent. By comparison, next year's potential tax hike would increasefederal revenues by 16 percent, according to CBO. ___ ROMNEY: "President Obama has failed to even pass a budget. InFebruary, he put forward a proposal that included the largest taxincrease in history, and still left our national debt spiraling outof control, and the House rejected it unanimously," Romney said inan April 4 speech to newspaper executives and editors. ROMNEY AGAIN: "Rapidly rising federal spending and debt threatensour economic future, and the president has responded by proposingthe largest tax increase in history," Romney said in a Feb. 22release. THE FACTS: Obama's budget proposal would represent one of thelargest tax increases since World War II, if you count letting thepayroll tax cut expire as a tax increase. But again, it wouldn't bethe largest ever. Obama's 2013 budget proposal mixes tax cutsdesigned to improve the economy with long-term tax increases aimedat reducing the federal budget deficit. Obama has proposed extending Bush-era tax cuts for families makingless than $250,000 and ending them for families that make more. Hewould end tax breaks for oil and gas companies but make permanentthe research and development tax credit. In 2013, Obama's budget proposal would increase tax revenue by $195billion over current policy – if you include the tax increasefrom letting the payroll tax cut expire. The tax increase wouldrepresent 1.2 percent of GDP. Or, measured a different way, itwould increase tax revenue by 7 percent. That would rank as the fourth-largest tax increase since World WarII, behind tax hikes enacted in 1950, 1951 and 1968, according tothe Treasury Department paper. Further dousing Romney's claim, House Republicans have passed abudget for next year – which Romney has embraced – thatwould raise just $7 billion less in taxes than Obama's budget in2013. That's the equivalent of a rounding error, when you'retalking about revenues of $2.7 trillion. ___ Online:. The e-commerce company in China offers quality products such as Pluggable Terminal Block Connector , China Barrier Terminal Block Connector, and more. For more , please visit Plug In Terminal Block Connector today!
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