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President Obama and Taxes Next Year

  Sanjiv Gupta CPA  Published 
President Obama and Taxes Next Year

The re-election of President Obama to the white house may have come as a relief for him; however, it just is that part of the deal. He comes back to deal with the headache of an economy that is just coming out of the ditch. He has to handle the expiry of the tax breaks that have for a long time now buffered the American population. In fact, the imminent increase in the capital-gains tax rate in this coming year is fueling an increase in the sales of some privately-held businesses in America.


The fact of the matter is that most of the business owners in America have lots to gain from making a sale on their assets as they seek to dispose of off the underperforming assets, especially those deals that can be closed before the start of the next year. At the turn of the year, it is expected that the maximum tax on investment income will rise from its current threshold of 15% to a minimum of 23.8% on most of the capital gains. This situation is especially true for higher-income earning homes. In the same vein, it is expected that many sellers will convert their equity in homes into retirement funds.


While some people took advantage of the increase in taxes to make smart sales, there are other people who have chosen to wait until the last minute to see if there are chances of a better deal. However, the legislatures have to first come to a decision with regard to the direction the tax increases and spending cuts will take. While a number of austerity measures are being put in place, individuals and companies alike are being asked to take some austerity measures of their own.


As it stands, the top tax rate is set to go up at the end of the year by a minimum of 3.8 percentage points due to a provision introduced by President Barack Obama through the overhaul of the health care system. Even then, now that the election is a done deal, the negotiations that will take place are expected to bring the numerous tax and spending measures to the economy.


Sometime in the year 2012, the president and Congress had come into an agreement to extend the current 15% capital-gains tax rate all the way to this election year. However, that deal is on its death bed, and another deal must be hammered out. The absence of such a deal by the close of business this year could only mean one thing; that the rates revert to the higher ones that stood at almost 25%. Add this to the extra charge from the health-care law, which is to be charged for higher-income households as well as the maximum tax on investment income, and then you have a rate of up to 28.8% or even more. In essence, for the high earners who do not handle their estates in time, the next year is going to be a tough one.


The re-election of President Obama to the white house may have come as a relief for him; however, it just is that part of the deal. He comes back to deal with the headache of an economy that is just coming out of the ditch. He has to handle the expiry of the tax breaks that have for a long time now buffered the American population. In fact, the imminent increase in the capital-gains tax rate in this coming year is fueling an increase in the sales of some privately-held businesses in America.


The fact of the matter is that most of the business owners in America have lots to gain from making a sale on their assets as they seek to dispose of off the underperforming assets, especially those deals that can be closed before the start of the next year. At the turn of the year, it is expected that the maximum tax on investment income will rise from its current threshold of 15% to a minimum of 23.8% on most of the capital gains. This situation is especially true for higher-income earning homes. In the same vein, it is expected that many sellers will convert their equity in homes into retirement funds.


While some people took advantage of the increase in taxes to make smart sales, there are other people who have chosen to wait until the last minute to see if there are chances of a better deal. However, the legislatures have to first come to a decision with regard to the direction the tax increases and spending cuts will take. While a number of austerity measures are being put in place, individuals and companies alike are being asked to take some austerity measures of their own.


As it stands, the top tax rate is set to go up at the end of the year by a minimum of 3.8 percentage points due to a provision introduced by President Barack Obama through the overhaul of the health care system. Even then, now that the election is a done deal, the negotiations that will take place are expected to bring the numerous tax and spending measures to the economy.


Sometime in the year 2012, the president and Congress had come into an agreement to extend the current 15% capital-gains tax rate all the way to this election year. However, that deal is on its death bed, and another deal must be hammered out. The absence of such a deal by the close of business this year could only mean one thing; that the rates revert to the higher ones that stood at almost 25%. Add this to the extra charge from the health-care law, which is to be charged for higher-income households as well as the maximum tax on investment income, and then you have a rate of up to 28.8% or even more. In essence, for the high earners who do not handle their estates in time, the next year is going to be a tough one.