New York Governor Andrew Cuomo and other legislative leaders agreed to income tax cuts for New York taxpayers who make $40,000 to $300,000. This will save most middle-class families $300 to $400 a year. The tax cuts will be funded by $2 billion from a tax increase on New Yorks wealthiest citizens. These highest New Yorkers will pay an 8.2% rate, increased from 6.85%. New Yorkers who file jointly and make $300,000 to $2 million, or single filers who make $150,000 to $1 million will remain being taxed at 6.85%. Governor Cuomo was always against any tax increase and during his campaign he said there would be none. He used to be opposed to creating a “millionaires tax” and wanted to avoid further cuts in education, and health-care spending. He said millionaires tax would drive employees away to other states. Now, Governor Cuomo says the 4.4 million middle-class taxpayers who will receive the cuts will revive the economy with up to $1 billion in spending. It would be the lowest taxes for middle-class families in 58 years. It will put thousands of people to work. Other elements of the deal include: $1 billion fund to rebuild roads, bridges, parks, dams, and schools and invest in energy efficiency; a $25 million tax cut for manufacturers; a reduced Metropolitan Transportation Authority payroll tax for small businesses and end it for private and parochial schools; $25 million in tax credits for hiring unemployed inner-city youths; legislative leaders agreed to pursue a constitutional amendment for private-sector casinos; and flood recovery grants of $21 million and tax credits for small businesses and farms and counties.

New York took the first step, and has done regionally what President Obama has be wanting to do nationally since January. They took the first step to raising taxes on the wealthiest taxpayers, allowing middle-class families to save a decent amount of money on their taxes. Governor Cuomo reminds me a lot of Congress. At first he was completely against tax millionaire’s more than the middle-class because he feared, what I’m sure members of Congress and the Supercommittee feel, that the upper class taxpayers would rebel and leave the state. Well, we will see what happens when these taxes go into effect, but from what Cuomo is projecting, it seems like there are more pros than cons. More money for the middle-class families means more spending money, which means more money put into the economy, and at the end, Cuomo listed credits, grands, and rebuild funds that would come as a result to the millionaire’s tax. Maybe, if Congress can witness how the people of New York act after they do their taxes this time around, they’ll be able to decide if raising taxes on the wealthies of all Americans is right to do or not.

 http://online.wsj.com/article/APcd653f82c6ab4f82b9bbc61080528e30.html?KEYWORDS=taxes

Two Changes to the Tax Code

1. Raise taxes on the wealthiest of Americans. We need to raise a lot of money to even put the smallest dent into lesseng the federal deficit. It is impossible for most of it to come out of the middle-class families, even if we do make up a majority of the economy. There is no reason that taxpayers who much so much more than the average family pay so much less in taxes. The wealthiest Americans have a lot more disposable income than do middle-class families. They have the ability to pay the extra taxes. Middle-class families need all the money they can get just to pay the bills, buy the groceries, and put a little extra away in an emergency fund if they can. The wealthies Americans should pay their full share, maybe even more, of the tax burden.
2. Cut tax loopholes for corporations. Just like putting more of the tax burden on the wealthiest taxpayers, corporations need to pay their fair share to reduce the deficit as well. Exxon/Mobil is one of the wealthiest companies known, and they not only didn’t pay any federal income taxes in 2009, but received an IRS refund for $156 million. GE was another company that didn’t pay federal income taxes. A lot of the reasons they don’t pay any taxes is because of unfair tax breaks and loopholes that tax planners set up during the year to reduce corporations liabilites. Some of these are oil and gas company tax breaks and tax breaks for coprorations that oursource jobs. These loopholes and breaks need to be closed, and corporations need to pay thir fair share of federal taxes to raise more money to reduce the deficit.

Two Changes to the Budget

1. National Defense. With a majority of our troops coming home, we can save some money on the national defense budget. Of course, we shouldn’t take so much money out of this area that it puts our national safety at risk or that we can’t take care of our soldiers while they are back home, however, it should not cost as much money to take care of our soldier while they are on our soil than when they’re overseas. We can’t short change our soldier, but we do need to be conscious that we have other areas of the budget that might need extra money than the national defense area. Especially, if the money is not being put to good use.
2. Student Financial Aid for College. Everybody always says how children are the future. While we’re sitting in our classes our professors always say we are the future of the world, we are going to make a difference. How are students suppose to make a difference if they can’t afford to go to shool. Personally, I attend Central as an undergraduate all on loans, and I’m sure I am not the only one. I know I can make a difference, but unless I got the opportunity to receive a federal loan, I would not be where I am today. There are so many other people in my position, or positions worse than I am. It is the hardest thing to get a loan, but it should be seen as an investment. You’re suppose to invest in your future. That’s what many adults say college is. There can be the next astronaut or doctor to cure cancer out there, but if they can’t afford to go to school their potential will never be revealed. The government needs to help students more because if there are more people in the world without higher education, that is less people getting paid, less taxes, less money for the government in the future. You have to give a little to get a lot.

Amazon.com Inc. strongly supports federal legislation allowing states to collect state sales tax from internet retailers. They are willing to agree as long as a few companies are permitted to duck the requirements. As of now, online companies are not mandated to collect state sales tax in states where they don’t have any physical pesence. Many times, this places them at a competitive advantage over local stores. They have clashed with a few states this year over the effort to collect sales tax. In early November, a bipartisan group of ten senators introduced a bill allowing states to require online and catalog retailers to collect sales tax. This group of senators is trying to make it an equal opportunity between local mom-and-pop stores and other smaller internet businesses with the giant internet retailers. It is estimated by the National Governers Association that states are currently missing out on collecting over $22 billion each year on sales taxes from online purchases. The group of ten senators introduced a bill that will allow states to choose whether or not they want to collect sales taxes from out of state businesses. If states do not wish to join, they would have to adopt certain simplification requirements to become eligible to collect the taxes. Legislation is opting to keep the threshold very low for exempting businesses. If it is not kept low, the objectives of protecting states’ rights, addressing the states’ needs, and creating fairness among the sellers will be sacrificed. As of now, the bill proposes to exempt online sellers with less than $500,000 in annual sales. Only 1% of online retailers sell more than $150,000 per year. Ebay Inc. agrees tthat small internet retailers need protection to keep competition strong with large retailers.

Coming from a consumer, I really enjoy the fact that I don’t have to worry about paying sales tax when I purchase something from Amazon.com. Especially, because everything is so much cheaper than at our local Wal-Mart Target, and we don’t have to pay sales taxes. That’s extra savings for us! But, it is true that most people do not think about looking at the mom-and-pop online retailers or even the local mom-and-pop stores in our own towns because they are usually so much more expensive than the major retailers. There needs to be some sort of legislation that puts local stores on the same level playing field as the larger retailers. However, even if big stores had more “penalties” it is so much more convenient for people to do all their shopping in one store rather than shopping around to multiple smaller stores. Allowing internet retailers to impose sales taxes will be a good way to allow to raise tax revenue to help put towards the defecit. It would be just like buying items from any store in your own town. It would be better than raising taxes on anything else.

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 Unfortunately, more children fall into the “special needs” category than ever before. Autism effected 70% more people from 2005 to 2010. Having a special needs child isn’t only hard for the parents and families effected, but also for their wallets. It can get extremely expensive at times to take care of a special needs child. The tax code can help with that tax burden if you know where to look. There are many tax breaks for education, but for a lot of special needs children, the parents usually don’t just rely on the free education from public schools. Many parents choose a range of sumplemental therapies for their children yet, they don’t know about the medical-expenses deduction for help with those costs. Tax rules allow deductions for diagnosis, cure, mitigation, or treatment primarily to alleviate or prevent a physical or mental defect or illness. This includes the cost of a school or program if prescribed by a licensed health-care professional. Therapies such as occupational, music, dance, physical, social-skills groups, and hippo-therapy are a few of the different types of therapies included in the medical expenses deductions. Travel costs and even food and lodging can be detected if it works with the code. However, we have to remember that medical expenses are only deductible above 7.5% of adjusted gross income. Of course, medical expenses aren’t only for those with special needs. It is also available for those who have surgeries or prescriptions throughout the year. However, families who want to take the medical deduction for their special needs child should seek expert tax advice.

There are so many deductions and credits and options we could take with our income tax return that, unless we are a trained tax professional, there is no way we could remember every single one, and then let alone if we qualify for it or not. It is even more difficult for families who are focusing more on taking care of their children then on worrying about the specifications of the tax code. But little do they know, a little extra money they spend on a tax professional can save them thousands of dollars on their tax return and can reduce their tax liability or increase their tax refund. Tax deductions are here to take care of us, the taxpayers. The government makes money off those who do not take full advantage of their deductions. Most Americans don’t take full advantage of the deductions so why not take something that is due to you! We are not required to pay more taxes than we need to, so let’s not do it anymore!

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The Internal Revenue Service once had an income tax provision in place that was designed to encourage taxpayers to buy new cars and they could deduct the sales tax from the purchase. As this provision is not in effect anymore, the IRS did replace it with a different but similar provision. As long as these taxpayers itemize their deductions on next years income taxes, they will be allowed to decide whehter they want to deduct general state and local sales taxes paid instead of deducting state and local income taxes paid. This is a great tax benefit for those states that don’t have a state income tax, such as Florida or Texas. Not only is it beneficial for those who don’t have a state income tax, but for those who make a large purchase during the year, such as a car, and who pay very little in state and local income taxes. Calculating the deduction can be very difficult. Taxpayers have a choice in how they decide to calculate the amount. They are allowed to claim the actual sales tax they paid, or they can choose to deduct an amount from a table provided by the IRS that varies based on [a person’s] state of residence, income level and number of dependents claimed,” says Mark Nash, parner of personal financial services at PricewaterhouseCoopers in Dallas, Texas. “If you use the tables,” he adds, “you are allowed to add to the table amount any general sales taxes paid on a vehicle purchase” or on certain other items, such as a home improvement.

As much as the Internal Revenue Services gets criticized for not caring about the taxpayers, they do try to make the tax code equal for all taxpayers. If there is a benefit for those who have paid state and local income taxes, then there needs to be an equivalent rule for those who don’t pay those taxes. The deductions for general state and local sales tax is a great addition to the code because it could benefit everybody. And taxpayers can pick between the two deductions so they can use the one that helps them out the most. Who wouldn’t like that? This is another addition to tax code that all taxpayers could be aware of. It could mean the difference between a tax liability or a tax refund. Even if the difference between the two isn’t that great, any amount helps.

 

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Bill Gates and Warren Buffet are two men who are very much the same when it comes to spending their money. However, they may have differences when it comes to taxes. We have all heard of “the Buffet Rule”. Warren Buffet believes taxing the rich more than the lower and middle class people is the way to organize taxes in order to help reduce the deficit, and he has become highly public about it. Bill Gates, on the other hand, has been a lot more quiet on the issue. He has been focusing his issue more on lobbying for more government spending on foreign aid. But what does Bill Gates think about the Buffet Rule? He was asked this question during an interview with ABC’s “This Week.” The first time he was asked, his answer was, “certainly there’s a case to be made that taxes should be more progressive, and that’s being debated by various people.” He was very passive in his answer and didn’t give a direct response. But, on the second try Gates said, “I’m not an expert” on taxes, but that “clearly, you can’t raise the taxes we need just by going after that 1%. Yes, I’m generally in favor of the idea that the rich should pay somewhat more, but to really deal with the deficit gap we’re talking about, that alone, just numerically, is not going to be enough.” During the interview, and on an everyday basis, Gates never fully states if he favors or does not favor the Buffet Rule.

Everyone has had their own opinions on setting the new tax policy because it is going to effect everyone very differently. It is hard to try and please everybody, and most likley, no matter what policy is set in place not everybody will be satisfied. Bill Gates and Warren Buffet have always been extremely favored men in society. They both give immensely to charity and comment on America’s economy and aim to provide assistance when possible. But, now Buffet is in the limelight in setting this tax policy and he has been criticized by a lot of people over it. Now I’m sure these two strong, independent men are not new to a little backlash, but perhaps Gates is just trying to avoid constantly be a spectacle in this tax situation. He sees his friend Buffet on the newspaper and in the news almost everyday. Maybe Buffet doesn’t want that much attention. Maybe, he just does not feel that it is his place to set tax policy because it is not his area of expertise.

 

http://wsj.com/wealth/2011/10/31/bill-gates-supports-taxing-the-rich/?KEYWORDS=taxes

Even though many are bummed due to an increase in inflation, they will be able to see some tax relief next year. The standard deduction, federal income-tax brackets, and other aspects of the tax code are adjusted each year to reflect the increases and decreases in inflation. Even with the discussion of the change of tax rates in the future, indexing for inflation seems to be pretty secure for a long time. Among the changes announced by the Internal Revenue Service are as follows.

• The standard deduction. Almost two-thirds of taxpayers claim the standard deduction on their tax return every year. Single taxpayers received a deduction for 2011 of $5,800, but it will rise to $5,950 for 2012. For married couples, it will rise to $11,900 from $11,600. There are also additional amounts for those who are 65 or over, blind or both.
• The personal-exemption amount will increase to $3,800 from $3,700.
• The annual gift-tax exclusion. The annual gift-tax exclusion refers to the amount you can give away, as a gift, to as many people as you with without any tax consequences. The exclusion rate for this tax will remain the same at $13,000 for next year.

You can go to the IRS website to learn more about the changes in the tax code due to inflation.

All taxpayers are looking for tax relief whereever they can get it! Can you blame us? All we are doing is trying to keep as much of our hard working money as we can. I mean, we are the ones who worked for it, not the government. But, since we are all aware that taxes are a part of an economy, we should all do some tax planning to decrease our tax liability. This should include us knowing about any changes the IRS makes that affects our personal tax return. At least there is something in the tax code that works in our benefit. Of course the savings depends on the details of each individual return, but that should not discourage anyone from the relief that indexing for inlfation brings.

 

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We have all heard of Republican Cain’s “9-9-9”, and Perry’s flat-tax propsal. These plans are aimed to move the United States toward taxing consumption more and income less. Many economists favor these plans because it would encourage saving, which many people don’t do now. Saved and investment income would be greatly exempt from taxation. Savings would increase investment, productivity and jobs. These plans would eliminate many deductions and exemptions that we have today. Some believe that consumption tax is inevitable. The United States is one of the only countries that doesn’t have a consumption tax. Cain states that his plan will raise just as much money, if not more, than the current tax code and will have more people paying taxes.

Many people like the simplicity of the proposals but the liaberals and some Republicans worry that the flat tax or Cain’s “9-9-9” proposal could hurt middle and lower income households by shifting more of the tax burden on them because lower income families consume more of their income than those who make more money. Those who are against Cain and Perry’s plans believe that you can’t make the consumption tax as progressive as the income tax. However, those who favor the plan say that exemptions for lower income families will help with the burden of consumption tax.

At a first glance, Cain’s plan sounds pretty great! Our income tax rate would go down significantly for a lot of people, and our sales tax rate, at least in Connecticut, would go up by less than 3%. This seems like it could work pretty well, but then when you think about how many trips the average family takes to Stop & Shop, Wal-Mart, or even a restaurant during the week, that extra 3% can send your bill skyrocketing when you look at your bank account at the end of it all. Cain says that the lower income tax rate would be an incentive to save money, but I’m not sure how much saving tax payers would actually do. The increased sales tax would force people to spend less money on the more unneccessary items, but I’m not sure it would be such a significant amount that people would save more of their money. And with most of the tax revenue coming from the spending of the middle class, I don’t think that’s really fair when the wealthier people have so much extra disposal income compared to others. We should let them pick up the slack, not those who need every penny they can get.

 

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As I search for different articles to blog about, I seem to always run into a ton about the Jobs Bill. Unfortunately for Obama, the Jobs Bill has met defeat every time it has gone for a vote in the Senate. However, for each proposal the Republicans deny, they do not have any other alternative plans to create jobs. And the public is rapidly losing faith in the Republicans. Most American citizens care greatly about creating jobs, which gives reason to why they want Congress to pass the plan. Republicans don’t plan to put all the blame on themselves of course. They have argued that many Senate Democrats don’t support the bill either. Those who oppose the bill are arguing whether the payroll tax break will be effective in boosting the economy and describe some elements as “stimulus spending” which they argued has not worked in the past. Although there is a lot of negativity towards this bill, David Axelrod, strategist for Obama’s re-election campaign, is arguing for the bill. He even submitted a three page memo to Congress fighting for the bill to get passed. Included in Axelrod’s memo is a plea to Congress to listen to the American people and pass this bill for them. Support for the Jobs bill has grown to 52% and only 36% oppose Leading economists warn that immediate action is needed to create jobs to avoid another downturn in the economy and 58% of Americans believe it will improve the job situation in the United States. Axelrod also discusses the Republican’s plan to repeal Wall Street reform, and cut taxes for Corporations and millionaires.

Congress is so opposite, it is unbelievable that they can agree on anything! Personally, I agree with those who want to pass the Jobs Bill. I believe it will be a great way to create jobs and stimulate the economy, especially for the middle class. And the Republicans, and those Democrats, who oppose the bills should really have an alternative plan for creating jobs instead of just turning down every proposal that comes to their desk. From a middle class taxpayer’s point of view, I feel like the Republicans are so much more concerned with helping the wealthy class that they don’t really care about the majority of taxpayers, the middle class. The wealthy class really does not have that much to worry about. They’re wealthy!! They aren’t the ones who are struggling to pay the mortgage, utility bills, and find grocery money to put food on the table. Living paycheck to paycheck isn’t something they are very familiar with, but coming from somebody who knows, it is something that controls your mind 24/7. It’s all you can think of, trying to get money, or find a job. The middle class is one of the reasons why the wealthy class is so rich, because we work for them and make them money. We should be the ones Congress is worried about protecting. Not the class who can pay to protect themselves. Republicans need to step out of their own beliefs and if they really look at this bill and can find even one reason why it might work, then they need to consider more about passing it than just tossing it aside. Their job is to put the people first. The majority of the people are middle class, and I think it is time for our needs to be first for a change.

 

 

http://blogs.wsj.com/washwire/2011/10/11/jobs-bill-likely-to-fail-gets-boost-from-obama-aide/?KEYWORDS=taxes

Republican Senator John McClain and Democrat Senator Kay Hagan are going to attach a proposal to President Barack Obama’s jobs bill for a tax break on United States companies’ overseas profit. Under this proposal, companies’ overseas income will be taxed at 8.75% instead of the current corporate-tax rate of 35%. This lower tax rate will apply to funds that exceed the average amount the company has repatriated over the last five years. A company can lower the 8.75% tax rate incrementally to 5.25%, but only if it expands its payroll in 2012. In order to get the tax rate down to this 5.25%, their payrolls would have to expand by 10% by either adding new workers, or paying their current workers more. The proposal also includes a $75,000 penalty for job cuts. That penalty amount will be added to the company’s gross income for each full-time position eliminated. Companies will be able to use this tax break for one year. Many multinational companies have pushed for the tax break, including Google, Apple, Phizer, and Microsoft.

This bill is a major incentive for job creation and for more multinational companies to recognize and repatriate their overseas income back in the United States. Even though I think the corporate income tax rate is a little low and will cause a huge loss of income tax revenue, hopefully the tax break will create an immense surplus of jobs. With more jobs, individual tax payers will hopefully have more money to put into the economy. But, because the difference in the tax rates is so big, companies are going to jump at the chance to bring their money over from overseas and to create more jobs to try and get the lower tax rate.

Another major bonus to this tax proposal is the $75,000 penalty if these companies cut full time jobs. I don’t know of any company that would risk losing money. And the penalty could be more of a loss than if they were to keep on a full time position. This is another major incentive to keep positions. The risk of a $75,000 loss per lost position combined with the ability to decrease their corporate income tax rate for money earned overseas is beneficial for both the company and the taxpayer. This proposal should definitely be accepted into Obama’s job bill.  

 

 

http://blogs.wsj.com/washwire/2011/10/06/senators-want-to-add-tax-breaks-to-jobs-bill/?KEYWORDS=taxes

 Because of the aging population and the poor economy, many baby boomers are downsizing by selling or donating their rare possessions. But, those who are doing so should be careful of the tax consequences to selling or donating these valuable items. The tax treatment is dependent upon whether or not the items are sold or donated. If someone plans to sell, their tax bill is most likely not going to be very big. The only way would owe a tax is if you make a profit on what you are selling, and most personal possessions do not go up in value. A recognized gain is a capital gains tax and the rate will depend on how long you have owned it. The holding periods for tax rates are 35% for a year or less, and 15% for a purchase made over a year ago. However, if the item sold is a collectible, it is seen as a long-term capital gain with a tax rate at 28%. Calculating your profit though is easier said than done. In order to know your profit you need to determine the purchase price of the selling item. If you are donating to a charity, those taxpayers who itemize can claim a deduction for the item’s fair market value. But it is important to keep photographs of what you are donating along with research supporting the value of the deduction.

Nowadays, everyone sells anything they can get their hands on and have no use for. Whether it is Craigslist or Ebay there is always a way for people to make money. However, now those who are selling rare possessions in order to make a lot of money off of them need to determine what is more beneficial for them. Is it more important to have the cash and maybe have to pay tax on that cash, or to have a charitable donation deduction if they itemize on their tax return. If the taxpayer is selling something that is very valuable, and in turn going to provide him or her with a very large profit, they need to do some extreme tax planning to figure out what the best route is for them and what way will provide them with the most money and the least tax liability.

 

 

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