We are following our Federal Government's work to improve our Economy. The so-called Bush Tax Cuts will expire, if nothing is done.
Tax Alert received from
National Write Your Congressman ...
www.nwyc.comMonday, August 16, 2010
Decision Time: The Bush Tax Cuts
It’s been almost a decade in the making, but one of the more anticipated sessions of Congress is now upon us as we debate what to do about the so-called Bush tax breaks. Of course, what has significantly changed the debate is the state of our federal budget and the economy. But before most of us decide whether this is the time for a tax increase on some, none or all taxpayers, we need a reminder of what they are and how they may affect us.
A Broad List of Tax CutsAcross the board tax cuts for earned income, long-term capital gains and dividends were enacted through two laws.* They allowed for additional exemptions, deductions, and a broader tax bracket for married couples, thus reducing the “marriage penalty.” An expanded child tax credit and other changes and adjustments were added to the tax code through these laws.*(Economic Growth and Tax Relief Reconciliation Act (EGTRRA) of 2001, and the Jobs and Growth Tax Relief Reconciliation Act of 2003. )Personal Income Tax Rates The chart below shows the current tax rates and what they will be if none are extended. The administration and some members of Congress are on record for allowing the lower rates to expire for the top two income brackets. Others feel that the current economic climate is not a good time to place higher taxes on a sluggish economy.
Income Taxes: (married filing jointly)Current - Income Level - Scheduled Rate Next Year
Family IssuesMarried persons received higher standard deductions and larger tax brackets as well as expanded child credit under the 2001 tax breaks. If allowed to expire, this “marriage penalty” would reduce tax brackets and the standard deduction for married taxpayers from their current rates. The child credit would decrease from $1,000 to $500. There is an element of a “hidden” tax inherent in allowing these provisions to expire in that they would, in reality, increase tax liability of married persons.Capital Gains and DividendsThe maximum tax rate on long-term capital gains and qualified dividends were reduced to 15%. Lower income filers faced a 0% tax rate. If the provision expires, it would move the capital gains rate back to a maximum of 20%, and qualified dividends would resume being taxed at the regular tax rate of the filer, some as high as 39.6%. These rates are also slated to rise for some another 3.8% in 2013 as a result of the recent health care bill.Capital-gains taxes:
Current - Income Level -Scheduled Rate Next Year
15% Couples up to $250,000 20%
15% Couples over $250,000 20%
The Estate Tax
One of the peculiarities of the 2001-03 tax cuts was to entirely eliminate the estate tax in 2010, then reset the rates to those in existence prior to 2001. Current debate centers on whether a compromise that will maintain exemption and tax rates similar to 2009 levels.
Estate Tax:
Current -Scheduled Rate Next Year
See NWYC Action Alert to voice your opinion on these issues. Go to www.nwyc.com.
The information contained herein is general in nature and is not intended as legal, accounting or tax advice or opinion as provided by National Write Your Congressman. The reader should seek professional guidance prior to taking any action based upon this information. National Write Your Congressman shall have no obligation to inform the reader of any changes in tax laws or others which may affect the information provided. Thank you for being a responsible American; your voice is making a difference.
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