Wednesday, February 15, 2012
Robert S. Keebler (CPA, MST, AEP, Green Bay, WI), in connection with Keebler & Associates, LLP, created a newsletter that details certain aspects of President Obama’s Fiscal Year 2013 budget (the budget was released on February 13, 2012). The newsletter’s list of key proposals that will affect tax planners is below, in full:
- Extend Bush tax cuts for all but the top two brackets. The only change would be to have the 33% and 35% rates go back to their pre-2001 levels of 36% and 39.6%. Taxpayers in the top two marginal brackets would still benefit from reduced rates on the portion of their income taxed in the lower brackets.
- Raise the long-term capital gains rate to 20% for single taxpayers making more than $200,000 per year, $250,000 for married taxpayers filing jointly and $125,000 for married taxpayers filing separately.
- Tax rate on qualified dividends would revert to ordinary income tax rates (up to 39.6%) for the same taxpayers. For everyone else, the rate would stay at 15% (or 0%)
- Tax carried interest as ordinary income.
- Reduce value of itemized deductions for taxpayers in the 33 and 35% brackets to 28% (33% bracket current starts at $178,650 for single taxpayers and $217,450 for married filing jointly.
- Reinstate the personal exemption phase-out for upper income taxpayers
- Extend reduction of social security tax on self-employed from 14.2% to 12.2% for the rest of 2012.
- Enact a permanent AMT Patch.
- Make the HOPE tax credit permanent. The credit is worth up to $2,500 per year.
- Make recent expansions of the low-income tax credit permanent.
- Restore the estate, gift and GST tax to 2009 rates.
- Require a minimum term for GRATs of ten years.
- Limit the duration of GST tax exemption to 90 years.
- Modify the rules on valuation discounts.
- Require consistency in value for transfer and income tax purposes.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this newsletter to my attention.