Month: January 2012

The Effective Tax Rate And What Is Real And What Is A Political Puzzle


Mitt Romney‘s 2012 taxes have been subject to extensive scrutiny and he has been cast a one of the wealthy elite. The truth is percentage wise he pays more in taxes than most American households, which is an effective tax rate.

The average middle class household may be taxed at thirty-five percent, but with deductions and other tax exemptions, a family making between fifty to seventy-five thousand dollars may only pay around six percent. Many families owe no taxes or pay extremely low taxes. Conversely, the tax rates for people making over one-million dollars per year is approximately nineteen percent. Many families in this country benefit from the same tax rates as Romney. Anyone who has investment income is taxed at fifteen percent. He does not belong to a special group with unique privileges; he is taxed at the same rate on capital gains, as any other investor. Tax rates can be interpreted in many ways to make them look as though someone is not paying their share. The truth can become obscured and a regular taxpaying citizen can be painted as a greedy capitalist. The average person works hard and the percentage of their income that goes to taxes is often examined carefully.

Mitt Romney pays his taxes and he may actually pay more than most citizens. The government is currently faced with a huge deficit, unemployment, and myriad economic problems. Instead of looking at his tax rate, people should look at his success rate and how he plans to move this economy forward.

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Lower Capital Gains Taxes Can Influence Voters


The current capital gains taxes on investment income are fifteen percent. While the taxes on the middle class wages are around thirty-five percent. Mitt Romney admitted recently that he pays only fifteen percent on his total yearly income. The Occupy Wall Street movement has not faded from voters’ memories or the specter of the wealthy one-percent. Romney found himself identified as a member of this affluent group.

There has been serious debate as to whether lower capital gains taxes will help the economy. Top economists do not agree on the effect of lower taxes investment income. Some contend that lower taxes on investment income will generate economic growth. Other studies do not confirm there is a correlation between lower taxes and increased investment activity. Over the years capital gains tax has fluctuated from almost forty percent during the mid-seventies to the present fifteen percent. It is noted that savvy investors will not be deterred from a good investment opportunity, even when there is a higher tax rate. There is no suggestion that a higher investment income tax reduces investment activity.

A down market can shape investment activity, when it comes to the buying and selling of stocks. A major concern of the average American is whether the Romney’s of the world, pay their share of the taxes. High unemployment and a poor economy have the non-investors questioning their higher tax rates and 2012 taxes. Lowering the capital gains tax may not alter the market, but it may influence how people vote.

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The Brownback Plan For Taxes Is Not Well Thought Out


The Brownback plan for 2012 taxes has not been thought out very well by the Kansas Governor. Many of the people who are lower class income or below will see a rise in paying taxes, whereas those in a high class income will see higher tax cuts. These figures were produced by the Governor’s own Department of Revenue, showing that the plan will work like a Robin Hood movie in reverse, taking from poorer homes and giving to richer homes.

Brownback’s plan reduces the highest tax bracket to barely five percent, and leans heavily on eradicating tax deductions and credits, which includes home mortgage deductions, charity deductions, sales tax deductions, and earned income credits which benefit the poor by allowing them to keep more of the money they earn, to be used as is necessary. Increasing the price of taxes on the poorer and impoverished people while providing tax cuts to more affluent and wealthy people is wrong. There should be consistency in taxation policies, and one policy should evenly apply to all income classes.

The Kansas Governor, Sam Brownback, should have thought out a much better plan for the 2012 taxes, as it simply is not right to raise taxes on those that need their money, and it is not beneficial for them in any way. More affluent families can afford to pay more in taxes, as they have more money in general. This is an obvious point that should not be neglected when thinking up a tax plan.

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The Recent Tax Scandals Of Hollywood Stars


Nothing but taxes and death are certain in this world, and you have probably heard this said before. Hollywood stars such as Sinbad, Pam Anderson, Nicolas Cage, Marc Anthony, Martha Stewart and others have had to learn this lesson in a very difficult fashion.  These celebs found themselves in hot water with the Internal Revenue Service, likely resulting from tax evasion, failure to file and remit taxes or attempting to cheat the system.

Lindsay Lohan did not remember to pay her income taxes in 2009, but there will not be a public assessment of her almost six-figure tax debt.  Steve Honig, her spokesman, declared to the Daily News that Lindsay’s personal finances are her own business, rather than a matter to be considered and discussed in the public arena.  This statement was made after the news of the starlet’s financial woes hit mainstream media.  TMZ.com has reported that documents that have been filed in Southern California, however, reveal that the star of ‘Freaky Friday’ owes nearly $94k in unpaid tax debt as the result of her failure to remit her 2008 income taxes.

Hip-Hop legend Run-DMC, Reveverend Run apparently has two celebutante daughters who have failed to pay taxes as well.  Angela and Vanessa Simmons, known best for their four seasons of appearances on the MTV reality show ‘Run’s House’ owe almost a half million dollars in taxes as per the Tax Watchdog column of the Detroit News.  Just over $225k is owed by 24 year old Angela Simmons according to liens that have been filed on behalf of the US government in New York as well as by state of California officials in Sacramento.  28 year old Vanessa owes nearly $225k in back taxes as revealed by similar findings.

Supermodel Christie Brinkley, also known as the ‘Uptown Girl’ owes $531k in unpaid taxes according to records.  She was ordered to pay these monies in November of 2011  when a lien was filed against the model in Suffolk County on behalf of her tax debt.  At 57, Brinkley is estimated to have a net worth of $80 million resulting from high-value real estate holdings.  Four-times divorced, this mom has been acting and modeling since her 1973 discovery in Paris.

Sharon and Ozzy Osbourne may want to consider firing their accountant.  Or taking on a reputable tax attorney.

These two, according to TMZ.com owe in excess of $1.7 to the IRS in taxes.  Per legal documents on file with the IRS the Osbournes own over $700k for 2007 and an addition $1.03 million for unpaid takes for 2009.  These, however, are not the only Osbournes with tax issues.

Kelly Osbourne, their child, is busy building up her own considerable debt in taxes as well.  She is reported to have as much as $34k in tax debt.

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More IRS Audits Planned


Nobody likes being audited by the IRS, although the chances of being audited are now actually higher as there are more of them planned.

For those filing who had an income of over $200,000, IRS audits were increased by around 34 percent between 2010 and 2011. Despite this hefty increase, audit rates in general are still low, regardless of income amount.

For those earning over $200,000, almost 4 percent were audited for the 2011 year, and for those earning over a million dollars, audits were increased by 24 percent, with around 12.5 percent of those taxpayers being audited. The Washington Post, The Wall Street Journal and Bloomberg all noticed this and commented on it.

In actuality, you have a two percent chance of being audited, although the Treasury Department still requires tax advisers and preparers to assume that all returns will be audited.

Of course, the chance of being audited affects the advice given, and if a tax preparer tells you that something will probably be accepted, he or she has to assume the return may be audited. Although there is no sure way to avoid being audited, take a look at our 10 ways to audit proof your return.

Various things can trigger an audit, in addition to your actual income, including which items are claimed, your deductions and any tax credits. If you claimed the earned income tax credit (EITC) you generally have more chance of being audited.

A large income alone draws attention, but does not necessarily mean that you will be audited. However, for those of us who are lucky enough to be very wealthy, the IRS actually has a special task frce to handle those tax returns.

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