President Obama Warns That More Tax Increases Could Be On The Horizon

After five weeks and approximately 4,000 webinars, Americans are finally getting up to speed on the tax changes emerging from the year-end fiscal cliff deal. But if the President has his way, we may find soon be back at the drawing board, trying to make sense of a new batch of tax increases.

While the late-December negotiations accomplished the necessary task of addressing the expiring Bush tax cuts, the other half of the fiscal cliff – the scheduled cuts in spending that were slated to take effect on January 1, 2013 – were merely postponed, with the sequester now scheduled for March 1^st.

On that date, approximately $85 billion in spending cuts will kick in, and if nothing changes, $110 billion in annual cuts will take effect on October 1^st and continue for the next eight years. These cuts would hit defense spending hard as well as other domestic programs, such as education, housing, and Medicare.

Just as we saw with the fiscal cliff deal, however, neither political party wants the sequester to take effect as scheduled, as the indiscriminate cuts would deal a harsh blow to the still-recovering economy.

In a statement issued earlier today, President Obama proposed delaying sequestration in the near term in the hopes that Congress could use the additional time to compose a viable budget. The President would buy some time with a mix of alternative spending cuts and yes…you guessed it…additional tax revenue.

Specifically, the President stated that he would be willing to cut spending on social programs so long as they are done “hand-in-hand with a process of tax reform so that the wealthiest individuals and corporations can’t take advantage of loopholes and deductions that aren’t available to most Americans.”

The President offered no additional details, leaving those who follow this sort of thing to wonder exactly what type of loopholes might be on the chopping block. But if you look to the President’s previous but as-of-yet-unfulfilled tax proposals, and further consider that the stated goal of the current administration is to trim an additional $1.5 trillion from our deficit over the next decade in order to stabilize our debt, some big tax changes may be afoot. Changes like these: Read the full article to see the changes.

 

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Morning Bell: 13 Tax Increases in 2013

Source:http://blog.heritage.org/2013/01/08/tax-changes-2013/

The cliff is steep,
and the deal is even more so!

New Year’s Day was tough for taxpayers. Thirteen tax increases kicked in.

The deal that Congress and President Obama struck that finally—but only partially—avoided the fiscal cliff resulted in seven tax increases.

Those hikes combined with six tax increases from Obamacare that also began on New Year’s Day.

13 Tax Increases That Started January 1, 2013 Tax increases the fiscal cliff deal allowed:

1. Payroll tax: increase in the Social Security portion of the payroll tax from 4.2 percent to 6.2 percent for workers. This hits all Americans earning a paycheck—not just the “wealthy.” For example, The Wall Street Journal calculated that the “typical U.S. family earning $50,000 a year” will lose “an annual income boost of $1,000.”

2. Top marginal tax rate: increase from 35 percent to 39.6 percent for taxable incomes over $450,000 ($400,000 for single filers).

3. Phase out of personal exemptions for adjusted gross income (AGI) over $300,000 ($250,000 for single filers).

4. Phase down of itemized deductions for AGI over $300,000 ($250,000 for single filers).

5. Tax rates on investment: increase in the rate on dividends and capital gains from 15 percent to 20 percent for taxable incomes over $450,000 ($400,000 for single filers).

6. Death tax: increase in the rate (on estates larger than $5 million) from 35 percent to 40 percent.

7. Taxes on business investment: expiration of full expensing—the immediate deduction of capital purchases by businesses.

Obamacare tax increases that took effect:

8. Another investment tax increase: 3.8 percent surtax on investment income for taxpayers with taxable income exceeding $250,000 ($200,000 for singles).

9. Another payroll tax hike: 0.9 percent increase in the Hospital Insurance portion of the payroll tax for incomes over $250,000 ($200,000 for single filers).

10. Medical device tax: 2.3 percent excise tax paid by medical device manufacturers and importers on all their sales.

11. Reducing the income tax deduction for individuals’ medical expenses.

12. Elimination of the corporate income tax deduction for expenses related to the Medicare Part D subsidy.

13. Limitation of the corporate income tax deduction for compensation that health insurance companies pay to their executives.

Each of these 13 tax increases will slow the economy, meaning that businesses will create fewer jobs. Fewer jobs will make it even more difficult to land a job than it already is for the more than 12 million Americans looking for work.

President Obama demanded these higher taxes. Obama’s tax increases, in Obamacare and through the fiscal cliff deal, will not curb deficits and debt, because growing spending is driving America’s budget crisis. Congress needs to immediately turn its attention to the actual cause of our deficit and debt problem: too much spending. The proper way to address this problem is through reforms to entitlement programs.

President Obama promised the American people a “balanced approach” of tax increases and spending cuts to reduce deficits and debt. He has achieved the tax increase portion of that approach. Now Congress needs to force him to follow through on the spending cuts portion.

These posts are for informational use only to educate people about their online income taxes and the financial world around them. If you found this helpful, share the original article or this one, and help spread the word! With tax season rapidly approaching let us get you the best income tax return you can possibly have by e-filing! Leave a comment if you know of any more tax changes!

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Tax Increases Loom after ‘Fiscal Cliff’

Taken from: http://blogs.wsj.com/wsjam/2012/11/21/tax-increases-loom-after-fiscal-cliff/

Almost all American households would take a financial blow next year—and low-income families would be among the hardest hit—if the White House and Congress fail to solve the “fiscal cliff” of big tax increases and spending cuts set to start Jan 2.

A married couple making between $20,000 and $30,000 a year would go from receiving, on average, a $15 tax credit to owing $1,408, according to research by the Tax Policy Center, a joint venture of the Brookings Institution and the Urban Institute.

These taxpayers would be part of the roughly 90% of American households that the Tax Policy Center estimates would face higher tax bills for 2013 if Washington cannot craft a deficit-reduction plan to replace the fiscal cliff—the $400 billion in tax increases and $100 billion in spending cuts slated to take effect next year.

The tax increases stem from the fact that various tax cuts and other tax measures all were passed on a temporary basis and are set to expire. Most of the increases would result from the expiration of Bush-era tax cuts, which would cause marginal rates to rise. Simultaneously, several temporary tax breaks pushed by President Barack Obama after the financial crisis also would end. The Wall Street Journal’s John McKinnon joined WSJTM’s Andrew Colton to discuss the impact the pending ‘Fiscal Cliff’ could have on the American household.

These posts are for informational use only to educate people about their taxes and the financial world around them. If you found this helpful, share the original article or this one, and help spread the word!

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