2012 Taxes And The Proposed 2013 Budget

Obama’s 2013 Budget Estimates and Tax Changes

President Obama has plans to make changes in the tax code to raise funds for his 2013 budget to jump start the U.S. hiring.

His proposals are only a wish list to congress, which is not required to act on any of them. However, some of these proposals have already been acted on in the recent years.

The United States Tax code, which hasn’t been overhauled in a quarter century, is riddled with special deductions that favor select groups. While major changes in the tax code during an election year is unlikely, analysts are of the opinion that deficits in 2012 taxes may ignite debates in 2013.

The following are the proposed changes and budget estimates.

INDIVIDUAL TAXES

* TAX CUTS. Workers are expected to pay lower payroll taxes through 2012.

* BUSH TAX CUTS. Tax cuts for households earning more than 250 thousand dollars per year will not be available in 2013.

The issue must be resolved before the end of the year, or every taxpayer will be required to pay more taxes.

* CARRIED INTEREST. Private equity managers and other wealthy people will be forced to pay a tax rate of 35 percent from the current 15 percent on capital gains.

* BUFFET RULE. The buffet rule will be put into action. The rule states that every taxpayer who earns more than a million dollars per year should pay a minimum of 30 percent tax rate on all their incomes.

* ITEMIZED DEDUCTIONS CAP. Exemptions for taxpayers who earn more than 200 thousand dollars will be removed.

CORPORATE TAXES

* THE PROPOSED CORPORATE TAX RATE. The Obama administration is expected to lower the corporate tax rate from the current 35 percent to 20 percent.

There are many other proposals that have elicited different remarks from people all over the country. Other changes are meant to simplify the process of tax return filing by U.S. taxpayers.


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