Posts tagged "fiscal cliff"

79 percent say all Americans should pay federal income taxes

Fox news reported that majority of Americans agree to pay federal income tax, though it may be as little as 2 percent of their earnings. According to a Fox news poll released on Thursday, 19 percent of Americans have agreed that they should pay something for federal income tax. Among these voters who favored the federal income tax, 71 percent are Democrats, 83 percent are Independents and 85 percent are Republicans.

IRS announced that 41 percent of the tax fliers didn’t pay the federal income tax last year. It was estimated by Tax Policy Center that non-payers percentage will be increased to 46 percent next year. Most of the voters are those who have come across Republican nominee Mitt Romney’s broadcast video where he remarked that about “47 percent of Americans” don’t pay federal income tax. During presidential campaigns, Mitt Romney also commented that USA is becoming an entitled society and most are dependent on the government. Still 63 percent of Americans think that what Mr Romney said has certain truth in it.

On average, three out of four voters believe that Americans are somewhat dependent on the government. About 46 percent of the voters think that federal government is doing too much nowadays. Only 22 percent of Americans thinks that federal government is doing only a little. The online poll has divided the citizens between federal income tax payers. These voters were all registered voters who also voted for the U.S presidential election.


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Posted by Taxmaster - January 25, 2013 at 11:09 pm

Categories: Federal Tax, Income Tax, State Tax, Tax Law   Tags: , , , , , ,

The Fairness of Taxes and the Wealthy

At the center of the confrontation between leaders over the fiscal cliff lies one particular question, is the federal income tax system fair? And in particular are those in the wealthiest income brackets paying their fair share. And while there seems to be consensus, at least to some degree, between President Obama and Speaker of the House John Boehner that federal income taxes should be raised for the wealthy, there is still debate over the amount the increase should be. There are many who would argue that the wealthy currently pay a disproportionate portion of federal income taxes, which is supported by recent data from the IRS. What seems to be missing, however, is an understanding of how the data does not accurately depict what the wealthiest Americans truly make.

Recently an analysis of the 2010 federal tax returns was released by the IRS, showing the different income groups allocation of federal income taxes. According to the analysis, the highest earners (individuals with an adjusted gross income of at least $369,691) were paying approximately 37% of all federal income taxes, even though they accounted for less than 19% of total income. When looking at this statistic alone, it would seem that there is validity in saying that the wealthy do pay a disproportionate amount of federal income taxes.

While statistics are best for interpretation of data, they are only as good as the information they are based on, and in this case the data is inherently misleading. The amount individuals pay for federal income tax are based only on what the federal government defines as income. In the case of the richest Americans many other sources of income are not included (e.g. inheritances, distribution of trusts, ect.). This shows that while the richest of Americans pay a disproportionate amount of the federal income taxes, much of their income goes tax-free.



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Posted by Taxmaster - January 20, 2013 at 11:05 pm

Categories: Federal Tax, Income Tax, Tax Law   Tags: , , , , , , , ,

Speaker of the House proposes tax hike for millionaires

In a recent proposition made by the Speaker of the House, John Boehner, an increase in federal income tax for the wealthiest Americans could be made, but only in exchange for an agreement by President Obama to make a major cut to entitlements.

This proposition would mark the first time that Speaker Boehner has offered a rise in marginal federal income tax rates since the talks regarding the fiscal cliff have begun. The offer proposed suggested a hike in Bush-era federal income tax rates for those who have an annual income of one million dollars or more.

As a part of the proposition Speaker Boehner also is looking to implement a new method, “Chained CPI”, for calculating the benefits of entitlement programs. By using this method the growth of federal health programs, such as Medicare, would slow down, saving billions of dollars over the next ten years.

Although the proposition did make strides in terms of federal income tax increases, there was nothing included to extend the federal unemployment benefits and no mention was made about how sequestration would be addressed.

A deal is not close to be made, but a phone conversation, after a recent face to face session, between President Obama and Speaker Boehner suggested that both parties are making progress in their negotiations.

The offer on federal income tax by Speaker Boehner was a significant move towards the position held by President Obama. Unfortunately the overall proposal still is unacceptable to the Democrats considering the level of revenue, the hit beneficiaries would take from the changes to entitlement programs, and the lack of extension to the federal unemployment benefits.




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Posted by Taxmaster - January 10, 2013 at 11:00 pm

Categories: Federal Tax, Income Tax, Tax Law   Tags: , , , , , , , , , , ,

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