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More taxes on the rich?

By Judy Martel · Bankrate.com
Wednesday, January 30, 2013
Posted: 2 pm ET

The rich may not be out of the woods on higher taxes. The "fiscal cliff" deal passed this year raised taxes on incomes above $400,000 per year ($450,000 per year for married filing jointly) and increased taxes on investment income, but as a new round of budget negotiations on deficit reductions begins, Congress may call upon the rich again for additional revenue.

Republicans believe any reductions in the deficit should come from spending cuts, while Democrats are considering higher taxes and fewer deductions. Up for discussion are eliminating or capping tax deductions that Democrats say are unfairly skewed toward the rich. Suggestions include eliminating the deduction for vacation homes and yachts and capping charitable deductions at 28 percent. Currently, you can donate up to half of your adjusted gross income and take a deduction.

Other possible reforms that would affect the rich include closing loopholes in the estate and gift tax and lengthening the term of a grantor retained annuity trust, or GRAT, in which the wealthy often place assets they expect to appreciate. When properly set up, a GRAT allows all appreciation to go to heirs tax-free. Some GRATs allow a term of as little as two years.

Though the rich may be end up losing some deductions or paying more in taxes, businesses could be in for tax reform as well. Congress is considering closing international loopholes for moving jobs overseas, eliminating tax deductions for meals and entertainment and eliminating corporate jet tax deduction loopholes.

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2 Comments
America
January 31, 2013 at 8:41 pm

The truth is we are now a socialist country and economy, rationing healthcare, finances, gas, next it will be food and we are just about there with housing.

Lewis MacDonadl
January 31, 2013 at 11:47 am

That sounds just like our government, cause a financial problem (spending) and have good hard working people who have done well for them selfs and OTHERS pay for it. With out hard working people who make alot of money and also spend alot of money. They create a trickel effect of spending from high to low income who benefit from this.Instead go after fat government spending such as abusive recipents of Social security, food stamps, medicare and medicade etc...Those people cost us hundreds of billions a year.We all know of good hard working people who fall in to the trap of entitlement. The government owes me. To that I say BULL !!!!!! Those people believe sitting on the couch is a sport.Do something to those illegal immigrants, what is the dam problem. You can not throw they all out , way to costly. Give them temporary status for say 5 years. They inturn have to get a job on the BOOKS and pay Taxes at a higher rate for those 5 years only.Ideally no federal aid for ten years must get a drivers license and backround checks. They pay a reasonable fee such as $500- $1000 to pay for the people who have to do all the admin. work to get them legal. In essence they will not cost the U.S. nothing and create a ton of tax revenue for the government.Now put all these people on the government utter for no reason other that entitlement into thriveing possitions.This all comeing from a guy who lost his small company. No income , federal aid or unemployment for over a year. People who look to the well off to pay for there problems such as the
( government ) always feel they are entitled.Some day I hope to be well off and will be made as hell if the government takes more than there fair sheer and NO more than the average person. We are all raised to work hard and achieve the real
(AMERICAN DREAM ) not SIT on the couch and live on what little the government so wrongly gives to those not in need but in greed. Thank you for reading my rant. IF the government is reading this please apply my stimulis package and let us all prosper under the (AMERICAN DREAM )