Increases per Kiplinger

[Snaggletooth]

Some of the increases planned by Congress and Obama administration per Kiplinger's letter, not 100% predictable but normally a good barometer:

1. 15% ceiling on Cap Gains and Dividends to be raised to 20%.
2. Rise in top rates from 33% and 35% to 36% and 39.6%, respectively.
3. Revival of aggressive phaseouts of personal exemptions and itemized deductions.

Other ideas less certain:

1. Elimination of LIFO.
2. Limit the benefit of itemized deductions to 28% (in addition to #3 above).
3. Raising taxes on profit-sharing payments to investment fund managers.
4. Ending the Domestic Production deduction.
5. Taxing medical insurance benefits to highly-paid personnel.

[erchess]

Reaction

The only one I did not already see coming was the elimination of LIFO. In environment featuring both inflation and tax increases that is going to be a real revenue enhancer if it becomes law. I could make a political statement but I don't want to do that on a tax board. If anyone knows of a board for discussion of US Politics and Economics where all views are welcome and personal rudeness is rare I would appreciate a PM.

[OtisMozzetti]

Predicted changes in tax rates help us to plan our income & deductions

Some of the increases planned by Congress and Obama administration...:

1. 15% ceiling on Cap Gains and Dividends to be raised to 20%.
2. Rise in top rates from 33% and 35% to 36% and 39.6%, respectively.
...

For tax planning purposes, it is quite useful to think about what is probably coming along. The U.S. government simply must have fiscal discipline and borrow less money.

Items #1 and #2 will occur because previously-enacted tax reductions were paid for only until through 2010. Thus, it is not clear which politicians will cause tax rates to no longer be as low as they have been.

[Jiggers]

% Depletion on Oil & Gas Royalty

Another item being considered is to eliminate the % depletion on oil and gas royalty.

That is a big tax item.

One of my big oil & gas clients received a letter from his oil company advising him to contact his representatives to fight this.

[joanmcq]

Well #s 1, 2, & 3 are part of the phase outs put into the legislation creating these tax breaks back in 2001.

I never understood why LIFO was allowed in the first place. The whole concept is counter-intuitive, and an 'accounting gimmick' if there ever was one. The elimination is part of the push to standardize the US with the International Financial Accounting Standards.

[Matt Sova]

Hilarious

For tax planning purposes, it is quite useful to think about what is probably coming along. The U.S. government simply must have fiscal discipline and borrow less money.

Items #1 and #2 will occur because previously-enacted tax reductions were paid for only until through 2010. Thus, it is not clear which politicians will cause tax rates to no longer be as low as they have been.

I really like the "fiscal discipline and borrow less money" line. You do realize you are talking about the US Government don't you.

[OtisMozzetti]

Let's get back to the point; there are higher taxes coming.

I really like the "fiscal discipline and borrow less money" line. You do realize you are talking about the US Government don't you.

Let's get back to the point which Snaggletooth brought up: there are several predictable forms of higher taxes that we tax professionals should expect to see as we aid our clients and ourselves to plan our lives so as to lower our tax burdens.