Don't Mess With Taxes

Washington's capital gains tax proposals have people talking. On both coasts. In Washington, D.C., President Joe Biden's call for those earning more than $1 million to pay a 43.4 percent tax on their investment earnings instead of the current 20 percent tax rate has anti-tax lawmakers and lobbyists working overtime to stop it before it gets going. That total comes from a return to the pre-George W. Bush tax cuts ordinary income tax rate of 39.6 percent plus the 3.8 percent Affordable Care Act investment income surcharge. Meanwhile, around 2,350 miles to the west, a new capital gains tax on... Read more →

The only thing we Texans take more seriously than our football (high school, college and pro) and politics (equally crazy at local, state and federal levels) is our barbecue. So it's no surprise that two of the three converged in George W. Bush's Presidential Library and Museum in Dallas. A handwritten note from W's brother, then-Florida Gov. Jeb Bush and current candidate to follow in his father's and sibling's White House footsteps, alerted Bush 43 of a Georgia barbecue joint's "Dubya's Texas Specials" and the meals' associated tax breaks. "Some people support that tax plan!," Jeb tells his older brother,... Read more →

By an overwhelming 89-to-8 vote, the Senate OK'ed a fiscal cliff package around 2 a.m. ET on New Year's Day. Yep, tax geeks were watching the 97 Senators vote live on C-SPAN2. And I was sober! Five Republicans -- Chuck Grassley (R-Iowa), Mike Lee (R-Utah), Rand Paul (R-Ky.), Marco Rubio (R-Fla.) and Richard Shelby (R-Ala.) -- and three Democrats -- Michael Bennet (D-Colo.), Tom Carper (D-Del.) and Tom Harkin (D-Iowa) -- voted against the bill. Sens. Jim DeMint (R-S.C.), Mark Kirk (R-Ill.) and Frank Lautenberg (D-N.J.) missed the vote. As blogged earlier, the deal maintains the current income and investment... Read more →

Assume crash positions, people. We are going over the fiscal cliff. The Senate is still working on a proposal to deal with the expiring/expired tax provisions that are part of the fiscal cliff. The House, however, has called it a day. Regardless of what the Senate might do later today, the House will vote on it tomorrow at the earliest. So technically, we're all part of the Wyle E. Coyote cartoon family, dropping helplessly into a financial canyon. Cliff jump courtesy surfbunny.tumblr.com.. Realistically speaking, it won't matter that much if the final tax deal is done at 11:59 p.m. tonight... Read more →

Don't get too excited, but there appears to be some optimism that a fiscal cliff deal might be near in advance of a mid-afternoon White House meeting with Senate and House leaders. I'm not going to get into blow-by-blow reporting of the negotiations, but it seems that as is too often the case in Washington, D.C., lawmakers might be coming to terms -- and their senses -- on a last-minute deal to stave off the implications of the Jan. 1, 2013, fiscal cliff deadline. OK, picky calendar watchers, the real effective date is Jan. 2, since that's the first business... Read more →

Welcome back from your holiday festivities. I hope you got everything you asked of Santa. Not to run the Jan. 1, 2013, deadline into the ground, but since we avoided the Mayan end of days, the possible coming U.S. financial calamity has totally taken center stage. So now we get to wait to see if there will be a post-Christmas miracle in the form of a fiscal cliff deal. Senators and the President are expected back in their offices on Thursday, Dec. 27. Representatives are awaiting word to return to Capitol Hill. Right now it's looking more and more likely... Read more →

When Congress and the President return to Washington, D.C., Obama wants lawmakers to consider a stripped-down measure -- dare we call it Plan C? -- that he says will keep taxes at their current rates for all but the wealthiest Americans. While it will definitely be welcome by most taxpayers, it is far from the grand bargain that Obama and House Speaker John Boehner, who saw his own Plan B fiscal cliff proposal killed by the insistent anti-tax faction in his own party, tried to reach in 2011. As envisioned, such an agreement would be a political tax and spending... Read more →

OK, it's an easy joke, but you knew it was coming. It's also quite possible that Dec. 20, 2012, marks the beginning of the end of Rep. John Boehner as Speaker of the House of Representatives. Last night, Boehner was unable to quell the rebellion among GOP conservatives and abandoned his alternative tax plan, deciding to not put it to a vote. The so-called Plan B would have increased taxes on millionaires but permanently installed the lower Bush-era tax rates (and other provisions) for other taxpayers. The Ohio Republican has had a tough time marshaling his troops after the 2010... Read more →

You've got to give House Speaker John Boehner credit. He's united a diverse group of lawmakers, lobbyists and policy groups in their disdain for his fiscal cliff Plan B solution. House Speaker John Boehner making a fiscal cliff point on the House floor, Dec. 13, 2012. Photo courtesy the Speaker's office. So what's got folks shaking their heads? Among the proposals highlighted on the Speaker's web page are: Permanently extend the current income tax rates -- 10 percent to 35 percent -- for everyone making less than $1 million; for millionaires and more, the top rate would be the 39.6... Read more →

Unless you're a couple of tax professionals, the Internal Revenue Code probably had very little to do with your courtship. But the truth is, taxes can be a big part of every relationship. For most of us (and soon maybe more of us after the Supreme Court hears an estate-tax related same-sex marriage case), our tax laws have an effect on us once our relationships move to the "I do" phase. That's why Santa's romantically-named reindeer Cupid reminds us that our marital status on Dec. 31 determines our filing status for the whole tax year. These wise words are Reindeer... Read more →

And the march toward the fiscal cliff goes on. Over at my second tax home Bankrate, my story on some key tax laws that are set to expire in a few weeks has been turned into an infographic. These all were created or expanded as part of the Bush tax laws enacted in 2001 and 2003. The estate tax, which expired as planned in 2010 per Dubya's policy, was resurrected in 2011 and is set to revert to pre-Bush levels on Jan. 1, 2013. Ain't we got tax fun? You also might find these items of interest: What tax rates... Read more →

This weekend I was sorting through some stories on the difficulty that Congress has in reaching an agreement on tax issues. I know, you wish you had my life, right? Here are some headlines that caught my eye. Now here's the really interesting thing. Only one of these five assessments of Congressional tax deliberations is from 2012. Can you figure out which is the most current? It's the fourth one, "Guessing at the law." That's the headline on a story in the September 2012 issue of Accounting Today about the trouble we're all having in trying to make year-end tax... Read more →

Those numbers geeks at the Tax Policy Center are at it again. They've come up with a fiscal cliff tax calculator (based on the version created back in the 2010 lame duck session when the Bush-era tax cuts were first set to expire) that gives us an idea of what our taxes might be depending on what happens with Congress and the president between now and the end of the year. Since there are so many options floating around Capitol Hill on how to deal with this impending fiscal fall, TPC has given us several options to mull over. We... Read more →

How optimistic are you that the White House and Congress will cobble together a deal to keep the U.S. economy from falling off the fiscal cliff on Jan. 1, 2013? I'm hedging my bets and predicting a short-term deal (six months or maybe a year) by year's end that would keep the worst from happening but not really make anybody happy. We are, after all, at the mercy of politicians. I hope I'm wrong. I hope both sides can agree to something a little more permanent, whatever that means on Capitol Hill. And I really hope that whatever the decision,... Read more →

You know it's a wacky election year when folks from disparate parts of the political world start seeing things the same way. Bill Kristol, editor of the neocon Weekly Standard, agrees with my assessment from almost a year and half ago that the Republican Party needs to know when to learn out to declare victory and run with it. The newly reelected President Obama has said he's willing to work on changes to some federal domestic programs, known as entitlements in the spending hawks' dictionary, but that for his part he wants the top two Bush income tax rates to... Read more →

Regardless of who wins the White House, the president will have to deal with myriad tax issues. A couple of them were topics last week at my other tax blog. Republican presidential candidate Mitt Romney has suggested letting us pick which tax deductions we want to claim, up to a certain dollar amount. Currently he's been focusing on a $25,000 limit. That brings up the question of which tax deductions would you pick? It also forces taxpayers and lawmakers alike to consider the high cost of popular tax breaks. If tax reform is ever achieved, many of these deductions, credits... Read more →

Every fall the Internal Revenue Service announces the upcoming inflation-based adjustments to tax provisions millions of taxpayers use. Not this year. Oh, the IRS did issue its annual revenue procedure -- Rev. Proc. 2012-41 -- last week, setting forth inflation-adjusted items for 2013. But there's a big hole in this year's announcement. Section 2 usually notes some key changes for the coming tax year. This year, however, the IRS takes advantage of the section to tell us what isn't in Rev. Proc. 2012-41. This revenue procedure does not include the following items: the tax rate tables under §1 of the... Read more →

The economy is a major presidential campaign theme, but one of the biggest economic threat -- the impending convergence of expiring tax laws and the debt reduction deal that imposes severe across-the-board budget cuts -- is still hanging out there. To a large degree, it's out of the president's hands. Congress must come up with a deal on taxes and spending cuts to keep the country from falling off the so-called fiscal cliff. And House and Senate lawmakers must do so in the few weeks that they will be in D.C. after the Nov. 6 election. Only then will the... Read more →

Summer vacation time is over. School's back in session. Moms and dads are back at work. But one group of Americans is about to take most of the rest of the year off. Yes, I'm talking about Congress. Check out the official House calendar. Our Representatives returned to Capitol Hill this week after their regular August/Labor Day/party conventions recess, I mean district work session. Lawmakers will break again Monday and Tuesday, Sept. 17 and 18, for Rosh Hashanah. Click on image for a larger view. Then they'll head back to campaign, I mean to their districts to hear concerns of... Read more →

If Taxmageddon arrives on Jan. 1, 2013 -- which I don't expect to happen, but with Congress, who really knows? -- one of the taxes that will return is the marriage penalty, as I discussed with Bob Moon in his recent Marketplace radio story on fiscal cliff tax implications. Some states, however, still have laws that produce a marriage tax penalty for their residents. The Tax Foundation created a map showing the 16 states where couples are likely to pay more when filing a joint state tax return than if they filed separate individual tax returns with their state tax... Read more →