Income Tax Considerations And Changes

Politicians across the country debate about ways to fund worthwhile programs, and the new mayor of New York City has received considerable attention regarding his proposed agenda. Mayor de Blasio has outlined a progressive agenda aimed at funding afterschool and early education programs, and his approach pushes for higher tax rates for wealthy individuals. You may have a lot of tax questions regardless of your income level, but using Turbo Tax 2013 may help you make sense of current and future tax scenarios.

Bill de Blasio
Bill de Blasio (Photo credit: Kevdiaphoto)

Mayor de Blasio would like to impose a tax increase on residents who report an excess of $500,000 in taxable income, and he wants this tax increase to be in effect for five years. Taxes 2013 and beyond may be affected by such a measure, and the rate would move from 3.88% to 4.41% under the de Blasio proposal. New York city resident tax rates have been as high as 4.46% under previous administrations, and the additional funds were intended for education and crime prevention.

A little over one percent of New York city residents would be affected, and the additional tax revenue raised would be approximately $500 million annually. This is in line with the goal of establishing continuous funding for education programs, and having this additional revenue may give Mayor de Blasio time to establish other funding sources once the higher tax rate has expired. Any discussion about proposed tax rate changes can lead to numerous questions, but Turbo Tax 2013 may help you find good ways to save at tax time.

Taxes And The Proposed Tax Rates

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.

Pre-2003 Taxation

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.

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.