Posts Tagged taxation
Taxes for the Rich Set to Go Even Higher
Posted on June 13, 2011 | Tax Studies.
One of the major campaign promises that President Obama offered to U.S. citizens was that he would ensure equitable taxation for all so that those who earned more would pay the lion’s share of taxes. The President criticized the Bush Administration for offering tax holidays to the rich, who he felt, did not need any tax advantages (because they were financially comfortable). True to their word, the Obama Administration and the Democrats in Congress has gone a long way in ensuring that the rich will be removed of tax cuts and will bear the largest share of taxes. They have come up with several bills and proposals to have the rich taxed more:
The Three Percent Surtax Proposal
One of the more recent tax moves targeted at the rich is the 3% surtax proposal by Democratic Senate members. If passed, the surtax will be loaded onto high income earners. The Senators are seeking to introduce a bill to have a surtax charge on individuals who earn an income of $1,000,000.00 and above. The proposed tax is part of the attempts to narrow a widening tax deficit in the government.
Democrats Seeking Removal of Bush Tax Cuts
There have been talks from the Democratic politicians in the past two years to have tax cuts removed for high income earners. The Obama Administration has been keen to have the tax cuts removed, but they have compromised their stand owing to various negotiations with the Republicans. However, the removal of the Bush Tax cuts for the rich now seems to be a matter of time. The proposal is to remove the tax cuts for any taxpayer who earns more than $250,000.00 a year. Removal of the Bush tax cuts will raise the effective tax rate for the top income tax bracket by about 6.5%.
0.9% Surtax on Medicare
In 2010, Congress passed a bill to make changes on the Medicare Law. These changes were an attempt to solve the Medicare situation, whereby more retiring citizens are seeking to get free Medicare from the program. As part of the Medicare Law, Congress introduced a 0.9% Medicare Surtax for income earners in the top tax brackets. The Medicare Surtax is to be levied on all taxpayers who earn more than $200,000.00 a year and for couples who file taxes jointly who earned more than $250,000.00 annually.
Proposal to Remove Tax Ceiling on Social Security
In May 2010, President Obama mentioned that the government was seeking to make a proposal to remove the ceiling on Social Security taxes. Presently, Social Security taxes are applied to a maximum of $106,800.00 a year and any amounts above this maximum are not levied for Social Security. If the change is made to have no cap on Social Security payments, tax experts project that the move will effectively raise the taxation on the top income earners by about 10%.
Given that the top income earners are currently taxed at a top rate of 35%, with the addition of these new taxes and the aforementioned proposed tax changes, some tax analysts say that this may result in the top income earners paying an effective tax rate of over 60%.
A Taxpayer’s Personalized Receipt for Paid Taxes
Posted on June 10, 2011 | Tax Studies.
Taxation is a process that has been in operation for centuries now, and most urbanized societies have some form of taxation. However, one universal principal of taxation is that the taxpayers have an obligation to pay taxes but no real ability to directly determine or dictate the usage of their taxes paid. The only way taxpayers have control of the taxes is by representation through democratic voting. However, the United States is now seeking to take taxation to a whole new democratic platform. There have been proposals in Congress in the recent past to require the government to provide itemized receipts to the taxpayer for the taxes they pay. This means that the taxpayer will know exactly how his or her taxes are used and appropriated. This move is set to make the government more accountable to the taxpayer and build taxpayer awareness and involvement in the tax process.
The White House Taxpayer Receipt Calculator
There have been many government and tax watchdog organizations that have come up with automated calculators to break down the tax paid by different taxpayers into the how the tax money was spent. However, the calculator that has drawn most reaction is the White House Taxpayer Receipt Calculator because the White House is seeking to be more accountable to the taxpayer by making him or her aware of how the tax paid will be used. The calculator is available at the whitehouse.gov website. To get a breakdown of one’s tax usage, one needs to input the Medicare, Social Security, and Income taxes paid in the last tax year. This is the amount indicated in box 4 and 6 of the W-2s and the tax amount on the Form 1040, 1040A, or 1040EZ, depending on the form filled out by the taxpayer.
The calculator breaks down the amount paid into 14 spending categories. 8 categories have a final figure while the others have the amounts further broken into subcategories. Percentage formulas are used to present an indicative budget of how the dollars paid by the taxpayer will be spent. The Defense category takes up the largest portion at 26.3%, the Healthcare program at 24.3%, and household payouts, including unemployment benefits, tax breaks, tax credits, tax reliefs, and retirement programs, take up 21.9%. One of the categories drawing quite some attention is the “Additional Government Programs” category that appears to be more like a “miscellaneous” item with no further details. The category makes up for 2.4% of the taxes paid. Critics are seeking to get further details for this category.
Bill to Make Receipt Law
Beyond the White House calculator, that seems more of a fun tool to help taxpayers become more aware of the usage of his or her taxes, some members of Congress are now seeking to have the taxpayers receipt as part of the law. Representatives Mike Quigley, Dave Reichert, and Aaron Schock have introduced a bill H.R. 1527 to have the taxpayers receipt as part of law. In the same light, the Senators Bill Nelson (D-Fla) and Scott Brown (R-Mass), both members of the Senate Finance Committee have introduced a bipartisan bill, S. 437- The Taxpayer Receipt Act, which also seeks to make the taxpayers receipt, a law. As lawmakers push the agenda of the taxpayers receipt, the public at large awaits to see if the U.S. will take up this new milestone in democracy to provide personalized accountability for tax expenditure.