It seems out of nowhere, President Obama has made a significant change in his tax plan proposal. Obama’s 2013 budget year now calls for more taxes on the wealthy, specifically a higher tax on dividends.

His new tax plan calls for an increase of the dividend tax to a maximum of 40% for households earning $250,000 a year. Coincidentally, that is equal to the higher maximum income tax rate set to go into effect in 2013.

According to the Obama administration, the increase in the dividend tax rate is needed to pay down the federal deficit and to make the tax code more progressive.

“Choices had to be made,” a senior Obama administration told reporters, explaining the bid to raise more than $200 billion over a decade with the steeper dividend taxes on the wealthy.

In addition to an increase in the dividend tax rate, the Obama administration is proposing to raise the current 15% long-term capital gains tax to 20% for the wealthiest Americans.

If you look closely, the Obama tax plan to tax the rich seems like an election year campaign ploy to win the lower and middle class vote. Fortunately for the wealthy and big corporations, it is extremely unlikely that Obama’s tax provisions will be become law, including his dividend tax increase.

“This is a reversal of what was a very specific policy feature of the first three budgets to keep dividends and capital gains taxed at the same rate,” said Michael Mundaca, a former top Treasury tax official under Obama, now at the accounting firm Ernst & Young.

“Companies may be more likely to retain earnings or seek alternatives ways to distribute their earnings such as by buying back stock,” Mundaca said.

Tax experts believe that big corporations may accelerate 2013 dividend payments into 2012 to dodge tax hikes.

“I wouldn’t be surprised if we see moving all their 2013 dividends into 2012,” Kies said. “A lot of U.S. companies are sitting on cash.”

source: reuters.com

Tags: budget deficit, dividend tax, dividend tax increase, Income Tax, obama administration, obama tax, obama tax plan, Tax Experts, tax increase, tax plan

Filed under Taxes by
Permalink Print Comment
February 13, 2012
Obama Tax Plan Calls For Buffet Rule

After four consecutive years of one trillion dollar-plus deficits, the U.S. administration predicts a budget deficit drop below 1 trillion. That’s what President Obama’s budget plan calls for based on his proposed tax and spending policies.

One of the biggest contributors to reducing the deficit calls for a raise in the income tax rate on the wealthy. The so-called “Buffett Rule” would guarantee that households making more than $1 million a year pay at least 30% of their income in taxes.

This proposal was actually presented by America’s wealthiest businessman, Warren Buffett. To support this tax proposal, he used the real life example that it’s unfair that he (being a billionaire) pay a lower tax rate than his secretary.

The implementation of the Buffet Tax would raise approximately $1.5 trillion dollars. Additional sources of revenue to reduce the deficit would come from a tax reform plan that includes the expiration of the Bush Tax and the elimination of various tax preferences.

Will Obama’s tax plan work, or will it backfire?

Maybe the focus of cutting the deficit should be on creating jobs. New jobs mean more tax revenue and less expenditures to pay the unemployed.

Tags: budget deficit, buffet rule, buffet tax, obama tax, obama tax plan, tax plan, tax proposal, Tax Rate, tax revenue

Filed under Taxes by
Permalink Print Comment
February 10, 2012
Free Tax Help For Preparing Your Return

The IRS has a new online tax tool to help low and middle income taxpayers find local sites to get free tax help. The free tax help is made available by individuals in the IRS Volunteer Income Tax Assistance (VITA) and the Tax Counseling for the Elderly (TCE) programs.

The tool, available 24 hours a day, makes it easier for qualified individuals to find free tax help directly from the Internal Revenue Service. Taxpayers with incomes of $50,000 or less can get their taxes done for free by IRS volunteers. Senior citizens aged 60 and older can get free tax help from volunteers in the Tax Counseling for the Elderly (TCE) program.

Taxpayers can access the application by clicking on this free tax help tool link or by going to irs.gov and entering the letters “VITA” in the search box. Next, click on the “Free Tax Return Preparation For You by Volunteers” option, then select the “Find a VITA site near you” option.

Once there, an easy-to-use locator prompts users to enter a zip code to search thousands of free tax preparation sites, narrowing the results to a selected radius. VITA sites are listed by location name, address, phone number, days and hours of operation, and the language-assistance options offered. Finally, taxpayers select a specific tax preparation site to get a map to provide step-by-step directions.

More than three million tax returns were prepared by VITA and TCE volunteers in during the 2011 tax season.

The IRS is continually improving its website to provide the latest tax information to taxpayers.

source:irs.gov

Tags: free tax help, irs tax help, irs volunteers, Tax Help, Tax Preparation, VITA

Filed under Taxes by
Permalink Print Comment
Next Page »

Archives
February 2012 (5)
January 2012 (3)
November 2011 (2)
October 2011 (7)
August 2011 (2)
July 2011 (3)
April 2011 (1)
March 2011 (3)
February 2011 (20)
January 2011 (15)
December 2010 (8)
November 2010 (5)
August 2010 (2)
July 2010 (1)
June 2010 (4)
May 2010 (2)
April 2010 (2)
March 2010 (2)
February 2010 (2)
January 2010 (5)
December 2009 (11)
October 2009 (1)
September 2009 (1)
August 2009 (4)
April 2009 (1)
March 2009 (3)
February 2009 (17)
January 2009 (17)
December 2008 (14)
November 2008 (17)
October 2008 (10)

FreeTaxUSA_Cash_120x60
Tax Help and Resources
Slash Your Taxes
Succeed in Tax Court
E-commerce Tax Guide
Property Tax Consultant
Internet Tax Guide
Recent Posts
Revised Obama Tax Plan: Higher Dividend Tax On The Wealthy
Obama Tax Plan Calls For Buffet Rule
Free Tax Help For Preparing Your Return
Expanded Version of IRS Smartphone Tax App Now Available
New Jersey Income Tax Cut Proposal Would Help The Rich

Copyright 2012

Revised Obama Tax Plan: Higher Dividend Tax On The Wealthy | True Tax Facts | Digg Mynews.

Advertisements