Learn About The Buffett Rule

Learn About The Buffett Rule

Watch out for debate misdirection when it comes to taxes. Dr. Cornwall wants everyone to know that there will never be a tax increase on the extremely wealthy population (The Buffett Rule) that will put the tiniest dent in the tax shortfall of the United States.

So why is everyone so focused on the debate about making those who bring home over $250,000 a year pay more in taxes?

The answer is the Buffet Rule by President Obama. This Buffett Rule raises the taxes on a group of extremely wealthy people, but we hear that many of them would be glad to pay more in taxes.

We are also hearing that this group is about two percent of the population of taxpayers. In all honesty, they are about 1.8% of the population that pays taxes. They are over two and a half million people according to data provided by the IRS.

The deficit right now is $1.1 trillion. That is $440,000 for each wealthy household a year. There will not be any type of increase in taxes that can resolve this tax situation.

If you are wondering whom the two and half million super wealthy people are, according to surveys from the Spectrem Group up to twenty five percent of them are entrepreneurs. These professionals are the people we need to be expanding their businesses so that our economy can get better.

So why are political figures trying to soak the rich?

President Barack Obama and Warren Buffett in t...
President Barack Obama and Warren Buffett in the Oval Office, July 14, 2010. (Photo credit: Wikipedia)

I am a believer that this is just a set up for what we can expect in our future. This is just a way to get started on the real tax increase so that the masses will be more open to it.

There have been many talks about using a value added tax system for our tax burdens right now so that we can fund our federal government. It is surprising how little attention the press is paying to the VAT tax. What we are mostly hearing about is in regards to taxing the very wealthy.

The VAT tax has not been a favorite choice for Democrats because of it being such a flat tax. This European method is going to need to be covered if they decide to add it America’s tax system.

In the next few months, this is what I see happening…

There will be an agreement that the top marginal rates will have to be increased to at least where they were before the Bush tax cuts. This will be the Democratic cover.

After that, the VAT tax will be implemented. Republicans will be able to say that even if they did not want to raise our taxes, we should be happy that they did so by implementing a flatter tax system instead of huge increases in income tax rates.

When this happens, America will be facing an expanding government that has a new tax program for politicians to use however they see fit.

Taxes And The Proposed 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.