Skip to main content

2013 Key Tax Proposals

Image
By
On February 13, President Obama's Fiscal Year 2013 budget was released. Follow this link to get a full copy of the 2013 Budget. The Treasury's Green Book containing general explanations of the Administration's revenue proposals can be found here.

Robert Keebler, a leading professional in the area of tax and estate planning, highlighted some of the key proposals potentially affecting taxpayers below:
  • Extend Bush tax cuts for all but the top two brackets. The only change would be to have the 33% and 35% rates go back to their pre-2001 levels of 36% and 39.6%. Taxpayers in the top two marginal brackets would still benefit from reduced rates on the portion of their income taxed in the lower brackets.
  • Raise the long-term capital gains rate to 20% for single taxpayers making more than $200,000 per year, $250,000 for married taxpayers filing jointly and $125,000 for married taxpayers filing separately.
  • Tax rate on qualified dividends would revert to ordinary income tax rates (up to 39.6%) for the same taxpayers. For everyone else, the rate would stay at 15% (or 0%)
  • Tax carried interest as ordinary income.
  • Reduce value of itemized deductions for taxpayers in the 33 and 35% brackets to 28% (33% bracket current starts at $178,650 for single taxpayers and $217,450 for married filing jointly.
  • Reinstate the personal exemption phase-out for upper income taxpayers
  • Extend reduction of social security tax on self-employed from 14.2% to 12.2% for the rest of 2012.
  • Enact a permanent AMT Patch.
  • Make the HOPE tax credit permanent. The credit is worth up to $2,500 per year.
  • Make recent expansions of the low-income tax credit permanent.
  • Restore the estate, gift and GST tax to 2009 rates.
  • Require a minimum term for GRATs of ten years.
  • Limit the duration of GST tax exemption to 90 years.
It is highly unlikely--approaching a 0% change--that tax reform will be taken up during the 2012 election year. If nothing is done, the Bush tax cuts will sunset to Clinton-era rates. Perhaps Congress will extend current rates for another year and take up reform in 2013.

Stay tuned...

Kevin Kroskey

    Labels

    Labels:

    Popular posts from this blog

    Diversification: Disciplinarian of Disciplinarians

    By
    Disciplined diversification works when you do and even when you don't want it to. Diversification in effect forces you to sell the thing that has been doing so well in your portfolio and to buy the thing that hasn't. While this makes rational sense, it is emotionally difficult to execute. Think back to the tail end of 2008--were you selling bonds and cash to buy stocks? Most likely you weren't unless your advisor or some sort of automatic trigger did it for you. Carl Richards of www.behaviorgap.com provided a good reminder of how diversification works in a recent NY Times blog post. The diversification he discusses here is more so related to equity asset-class diversification but also touches on the three basic building blocks--equities, bonds, and cash. He doesn't discuss alternative asset classes -- an asset class that doesn't fit neatly into the three basic categories -- being used to further diversification, but that's a detailed topic for another day. ...
    Read more

    Should We Go Back on the Gold Standard?

    By
    If you watched the Republican presidential debates, you might have noticed that a number of  candidates yearn for a return to the gold standard—that is, that every dollar issued by the government would be backed by a comparable value in gold bars that were stashed away in a government vault. Sen. Ted Cruz of Texas argued that the dollar should have a fixed value in gold, and Sen. Rand Paul of Kentucky added that printing money without backing in the precious metal destroys the value of our currency. Mike Huckabee, former governor of Arkansas, thinks that if not gold, then the dollar could be pegged to a basket of commodities. All are mostly concerned that printing money will cause runaway inflation.   But there may be several problems with this return to the fiscal system of the late 1800s and early 1900s. One is that inflation has barely budged even as the Federal Reserve Board was piling one QE stimulus on top of another, and the government was adding records amoun...
    Read more