You have probably read that President Obama submitted his final budget to Congress recently and that it was greeted by Republicans as ‘dead on arrival.’ We don’t want to get into a political discussion here but it should be noted that there are several proposals that have drawn wide bipartisan support and could resurface as parts of other legislation.
Included are several items that might eventually have an impact on estate and tax planning.
For purposes of this post, we’ll ignore the debate about deficit reduction for next year and the following 10 years and the projections about expected economic growth.
The administration budgets $955 billion in income by curbing “inefficient tax breaks for the wealthy” and closing loopholes for high-income households. Among the tax loopholes targeted for closing are rules that allows wealthy individuals (those making more than $250,000 per year) to avoid a 3.8% tax imposed by the Affordable Care Act.
Many individuals in this category could avoid the tax by passing some investment income through partnerships or businesses.
Additionally the budget proposed taxing capital gains at the same rate as regular income and the so called “Buffet Tax” which sets a minimum tax rate of 30% on people who have incomes over $1 million.
Further the budget proposal would restore estate tax rates and thresholds to 2009 levels.
The budget itself will probably not even get a hearing in the GOP controlled House of Representatives, but now that the proposals are in writing you can bet that they could become part of some tax bill compromise in the future.
If you need help planning your estate we’ll be happy to help.
