If passed, President Barack Obama’s 2013 budget proposal would have a significant impact on all taxpayers, but particularly wealthy earners, business owners and people with more than $5 million in assets. Although passage of the bill is unlikely, two issues that will see further debate are the extension of the Bush-era tax cuts and the payroll tax extension. Other possible changes to the tax plan that would cause major changes for taxpayers include raising the max tax rates of wealthy individuals to as much as 36.9% and limits to personal exemptions and itemized deductions for those earning more than $200,000. For more on this continue reading the following article from JDSupra.
President Obama unveiled his fiscal year 2013 budget on February 13, 2012 amidst a cloud of uncertainty relating to Bush era tax cuts and the more immediate the fate of the payroll tax cuts (which news channels advise are to be extended later today). President Obama’s fiscal year 2013 budget proposals incorporate initiatives from his “Blueprint for America” as described in his 2012 State of the Union address. While some of the President’s proposals were immediately rejected by the GOP, others could move along quite quickly. The expected extension of the Employee Side Payroll Tax Cut could serve as a vehicle to move some of the proposals, such as an extension to the 100% bonus depreciation.
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What you will find striking in the summary outlining the budget proposal is the effect directly on individuals and
businesses. The most significant issue are:
- Reinstatement of the top individual income tax rates at the 36% and 36.9% tax brackets
- Reinstatement of the personal exemption phase out/limitation of itemized deductions for taxpayers earning more than $200,000 a year for individuals or joint returns with incomes over $250,000
- Return of a $ 1million lifetime gift tax exemption
- Capping the federal estate tax and generation skipping tax exemptions at $3.5 million per person (with portability between spouses)
Click here for a complete summary.