The stock market is expected to take a beating if tax rates on capital gains are increased by two thirds. There has been a lot of debate as to whether or not the economy will benefit or suffer because of these changes.
Apart from capital gains taxes, income taxes are also expected to increase. These changes will cause a lot of problems in the future unless the President and Congress agree on contentious issues. These two parties must agree before the year ends.
Investors in the stock market will have to protect their investments just in case taxes are increased. Many of them will have to sell before the new laws come into force. This is because an increase from 15 percent to 25 percent means that investors who will sell next year will lose 10 percent of their profits. For instance, those who plan to sell this year and get $100,000 in profits will pay $15,000 in 2012 taxes. If the same people liquidated their assets next year, they will have to pay $25,000 in 2013 taxes. The difference is quite significant, and many people will decide to liquidate their assets this year.
If a solution is not found before the election, the stock market might just experience the biggest sell-off in history as people rush to liquidate their paper assets before the next tax year.
People often consider many factors, including tax rates, when making investment decisions. This means that investors will consider what they will pay in 2012 taxes before they invest in anything.
Beginning this Sunday, the United States will gain bragging rights in the economic war with Japan and China: It will have the largest jobs-killing corporate tax rate in all of the industrialized world.
This is no April Fool’s joke. Once Japan officially drops its tax rate to 36.8% this Sunday, the USA’s will be at the top of the chart at 39.2%.
While the President has suggested a new 28% rate, Republicans claim that the reduction also would bring $350 billion in new taxes to offset losses. In response, the GOP is suggesting a reduction to 25%; however, the upcoming election seems to be preventing any compromise.
Any business groups are asking that the government make a cut in the rate for corporate taxes, believing the reduction would improve the growth of jobs and encourage reinvestment in industry. These groups cite moves in the UK to loser taxes by 6% from the former rate of 28% in a move to increase jobs and investment in Britain.
Tia Freeman of the Roundtable groups claims comprehensive tax reform to be imperative for the United States if the country is to remain an economic leader in the world.
Chair of the Senate Republican Policy committee, John Barrasso, R-Wyo. is also pressing for tax rate action. Barrasso claims that Russia and China with 20% and 25% tax rates respectively have lower rates than the US. This higher tax rate puts American companies at a disadvantage in the world market.
April 15th, this is the date that all Americans associate with the IRS. For many it is a stressful situation to try and figure out what exactly needs to go on their return. This is where a Certified Public Accountant or other tax professionals can help by pointing out useful tax adjustments now for next year’s return.
The regulations and codes for taxes are constantly changing and that is truer for this year because the Bush tax cuts are set to expire December 31. These cuts are projected to change how deductions can be made for retirement plans like the traditional IRA and Roth IRAs. Contributing more to a 401k through work can also be a good way to lower the taxable income one acquires within a fiscal year.
For the more affluent individuals it might make sense to roll over any traditional IRAs they own into Roth IRAs if they are projecting that their income after the age of 59 and half will be higher than it currently is. This would allow them to draw the payments from the Roth IRA as non-taxable income when they retire because they have already paid the taxes on the interest returns from those accounts.
Again, it is imperative to talk to tax professionals in order to gain the advice needed to plan for the changes coming in the next year. Seeking the advice of the benefits office within one’s company can help and is where the necessary adjustments need to be requested for changes in the 401k and the withholding forms. Also, the customer service representatives of the financial institutions that the retirement portfolios are being managed can also offer some guidance to tax adjustments now.
Maryland state senate has voted in a new tax and people are unhappy about it. Not too long ago the state senate in a majority vote decided to introduce a so called millionaire’s tax that would make people who earn more than half a million dollars pay more in taxes.
The collective thought of the senate is split at the moment, many think this is the right thing to pursue and others think that this is no fair to the people and that everyone should be taxed equally.
This tax vote came as the State Senate approved its version of the budget. This new measure moves next to the House of Delegates, which has flagged an openness to approaching the rich and asking them to pay more – but not really using the same outline favored by the Senate committee.
This proposed idea reflects a nationwide debate that has pitted the president against the congressional right leaning republicans in a tense standoff over the best way to lower the federal deficit. This also sparked an identically heated discussion in the Maryland State Senate. This idea also revives a higher tax bracket in Maryland that has in the past led to years of concern as to whether or not it would drive high earners out of the state before it expired two years ago.
The Maryland State Senate’s budget includes around half a billion dollars in spending cuts, moves the approximate quarter billion dollars in teachers’ pension costs to the counties for around five years, and then gives the state authority to seize the local income tax collections if counties don’t appropriately fund their education system.
The entire ‘Tax the rich’ vote sounds like a modern day Robin Hood act.
From Tax Cuts to Tax Increases – Maryland Senate Votes to Tax the Rich More
Maryland residents who earn more than $500,000 annually will have to pay more taxes after the Senate voted to increase tax rates for the rich. Many people see this as class warfare launched by liberals.
The proposal dubbed the “millionaire’s tax” was approved after liberal-leaning Senators refused to approve a smaller tax rate for all taxpayers unless the rich took a special hit.
More than 15,000 households will be affected by the new law. Couples filing jointly will have to pay at least 2,752 dollars more on their income.
The idea is similar to the proposals of President Obama that have pitted him against congressional Republicans in a serious standoff.
Senator Robert A. Zirkin, a democrat from Baltimore County, was against the proposal because it literally discriminated a certain group of people based on their earnings.
At one time Senator David Brinkley offended his colleagues after claiming that Karl Marx would be happy with the move. He apologized later on for the statement.
Senator Paul Pinsky, a Prince George’s County liberal democrat defended the proposal claiming that it is not wrong to ask high income earners to pay higher taxes.
After the Senate approval, the measure will be moved to the House of Delegates which has already indicated that it would like the wealthy in the society to pay more, but does not agree with the mechanism proposed by the Senate.
The Senate is planning to cut spending by nearly 500 million dollars. It has also indicated that it will authorize the state to collect local income tax if the counties do not provide adequate funds for their schools.
In order to pay-off the 15 trillion dollar federal debt and cut down the government’s one trillion dollar budget deficit, taxes should be increased to generate more revenue. The president was expressing his views to a group of business executives.
While speaking to members of the Business Roundtable, President Obama insisted that although his administration is working on a plan to cut spending, strategies to increase revenue should also be put in place.
Taxes will have a big impact on the outcome of 2012 elections.
All the potential Republican flag bearers Romney, Gingrich, Santorum and Ron Paul oppose tax increases. This means that the president will face a tough battle when campaigning for reelection.
There have been budget crises between the White House and Congressional Republicans who oppose tax hikes.
Whatever the outcome of the elections, there will be tax changes in December.
Payroll tax spearheaded by the Obama administration will come to an end while Bush tax cuts will also expire before the year ends.
President Obama wants to entrench the Buffet rule into the country’s tax code. If this happens, people making more than a million dollars annually will be forced to pay a flat rate of 30 percent in taxes. The president also plans to phase out Bush tax cuts for taxpayers with an annual income of more than 200,000 dollars or couples who make a total of 250,000 dollars annually.
The president claims that he only seeks a balanced approach towards tax collection:
President Obama is of the opinion that a simple adjustment can be made to the tax code to help in stabilizing the government.