New ‘fiscal cliff’ GOP revives failed budget talks
Republicans once again try to revive budget talks with the administration by proposing a $2.2 trillion ‘fiscal cliff’ offer in the House of Representatives. The Republican proposal from House Speaker John Boehner of Ohio counters the $1.6 trillion plan supported by the White House.
The White House had earlier proposed higher federal tax rates for the next decade, higher national debt limits, and possible extension of Social Security payroll tax cuts.
While the White House plan pushes for higher federal tax rates on the wealthy, the Republican version of the ‘fiscal cliff’ plan relies on curbing government and social service spending in order to avoid the ‘fiscal cliff’ and raise federal tax revenues in the next decade.
The ‘fiscal cliff’ is a term used to refer to the combined effects of the expiration of Bush federal tax cuts by the end of December, the beginning of across-the-board spending cuts in January, the beginning of federal taxes related to President Obama’s healthcare policies, and the failure of the Congress and the administration to agree upon a budget deal in 2011.
The new GOP echoes the main ideas from the failed budget talks with the president in 2011. However, Obama and the Democrats are now more bent on imposing higher federal tax rates on the wealthy and less willing to agree on budget cuts on benefit programs such as Medicare after re-election.
With ‘fiscal cliff’ nearing, Boehner and six other House Republicans state that their priority is to find a plan that can be “signed into law in the next couple of weeks.”
Categories: Federal Tax Tags: federal income tax, federal tax, fiscall cliff, income tax, tax cuts, tax law, tax reform
Payroll Taxes: A Growing Concern
You think corporations are paying their fair share on taxes? Keep this in mind…in 1969 payroll taxes and federal income taxes accounted for almost the same share of revenue going to our government. Today individuals make up 6 times the amount of corporate taxes. Still think its fair?Tax reform needs to focus on balancing the share of revenue that comes from each source.
Since the 1970’s payroll taxes have almost doubled until they reached about 2/5 of the federal revenue collected. This rise surpassed the single largest source of revenue for the federal government in 2009.
These types of taxes pay for the things individual citizens love the most including Social Security and Medicare. With these types of cuts being on the table the pressure is building to find a solution for the fiscal cliff we soon face.
So what is the problem here? Since 1970 disability recipients in the US has increased 600% of what they were in the 70’s. This bubble has led to expenses to exceed revenues by almost thirty four billion dollars. You may be aware of this intensifying welfare nation status quo and with this costs are on the rise. The number of baby boomers retiring and the number of still unemployed cast a shadow of doubt on whether or not these programs are financially viable in the long term.
Even worse health care costs are spiraling out of control and with the new advent of Obamacare who knows what will happen to the cost curves. If something isn’t done in the health sector soon to reign in costs Medicare as we know it will be in jeopardy.
Payroll taxes are regressive and only paid on income up to $110,000. Payroll taxes are also not paid on capital gains or passive income. Because of this regressive model payroll tax cuts tend to benefit the poor and middle class more than they do the wealthy and typically pack more a stimulus punch than other typical income tax cut strategies.
Something needs to be done and no one is stepping up to the plate. The AARP and other social groups show little support for any types of cuts to programs that may jeopardize the social safety net for those most in need. Their argument is that these types of programs help balance the inequality faced by the income classes in our nation.
Of course if you tampered with these payroll taxes and delinked them from the programs they support the government would have to find other sources of revenue to make up any shortfalls that may exist. We can do this by limiting the tax breaks on the wealthy or even revising the tax code to bring in more revenue thereby allowing us to retain and fund some of these programs our most desperate individuals rely on. Other ideas include implementing a carbon tax or a use tax that would disproportionately effect the wealthy and increase revenue generated by the federal government.
With the rising cost of technology in the health care industry and a lack of skilled labor cost will become an issue in the near future. This is one trend we face in the future. Are you ready to face that future?
Categories: Income Tax, Tax Law Tags: federal income tax, federal tax, fiscal cliff, income tax, payroll tax, tax increase, tax law, tax reform
New York businesses tax liens in IRS around 70,000
According to the Internal Revenue Service (IRS) database, several businesses in New York owe a staggering total of $92.3 million worth of tax liens. These open liens have been around for several years, and it looks like the Internal Revenue System is almost never going to get that money back. A lien, in terms of law, is a public notice attached to property or businesses, letting the world know that you owe some money to a creditor.
At the current economic situation, a lien is almost a necessity in order to get assurance that a debt will be paid. Some of the companies that are under the radar of the IRS include big ticket names such as the Pan Am Airlines, owing it around $12.7 million.
The liens range from the biggest debt to be $92.3 million by a Manhattan company named Knatten Inc., to the smallest amount owed by the Expo Design Center in Ozone Park, which is a mere 15 cents. Some of the companies insist that they have already settled their dues to the IRS. This includes a former touring company of a country singer, which owes $150,115.85. Another is a New York fashion designer who even styled the First Lady Michelle Obama, who owes $67,883.
Some of the businesses that still owes the IRS have closed out, some are even dissolved, like Cynthia Rowley Inc., which still has an open lien amounting to $64,245 as stated in the records.
Categories: Federal Tax, Income Tax, Tax Evasion, Tax Law Tags: corporate tax, federal income tax, federal tax, federal tax fraud, income tax, tax code, tax evasion, tax fraud, tax law