The President Plans to Double Tax Rates for the Wealthy
President Obama is planning to tax income from capital gains as ordinary income. This will increase the top tax rate to 39.6 percent. These changes are meant to raise taxes of up to 1.4 trillion from top earners over the next decade.
Couples earning more than 200,000 annually will be required to treat income from dividends as ordinary income. According to the president, this would raise 206.4 billion dollars over the next decade.
According to Gene Sperling, the country cannot afford to lose 206.4 billion dollars on its revenue budget by offering lower tax rates and tax cuts to top earners.
The president plans to increase the top tax rate to 39.6 percent by next year from the prevailing top rate of 35 percent. Capital gains would be taxed at a top rate of 20 percent from the prevailing 15 percent.
As part of his healthcare law, the president plans to increase the unearned income tax rate by 3.8 percent for couples earning at least 200,000 annually. Experts predict that in the next financial year, some taxpayers will have to pay federal taxes amounting to 43.4 percent on their dividends. This is almost an increase of 300 percent of what they are currently paying.
These proposals would return tax rates to pre-2003 levels. Proponents of these changes claim that it will promote a more efficient and just allocation of capital.
Generally, the president intends to reduce tax deficit on 2012 taxes by taxing the wealthy.
President Obama recently stated in a speech that the government does not need to continue offering tax cuts to individuals who are already doing very well.
There are many other changes in the tax codes that the Obama Administration is proposing.
- Interesting Facts On 2012 Taxes (2012taxes.org)
- The Relationship Between Capital Gains And Economic Growth (2012taxes.org)