Highlights of the New Tax Law include keeping the Estate Tax Exemption at $5.12 million dollars, but increasing the top tax rate to 40%. Single earners earning income of more than $400,000, or couples earning more than $450,000, will have their income tax rates raised to a higher bracket. Those earning more than $250,000 per year will have their itemized deductions limited. The Social Security Tax will be increased for everyone who reports any income. Capital Gains and taxes on dividends will increase. The “Patch” for the Alternative Minimum Tax has been made permanent (probably the best thing in the Tax Bill). There are also other provisions that deal with physicians reimbursements on Medicaid/Medicare and other issues.
There were NO reductions in spending agreed upon in exchange for raising the top earner’s Income Tax Rates. The automatic cuts in military and entitlements will go into place on March 1st unless they are renegotiated. The anticipated increase to the Deficit based on this New Tax Bill will be an additional $3.9 billion dollars in added debt in 2013. It is anticipated that $4 trillion in additional debt will be created by this New Tax Bill in the next decade.
The end results of the New Tax Law are slightly higher Income Tax Rates for those earning over $400,000 and add taxes for those who save and invest. The only real positive is the “Patch” (building any cost of living adjustment to the Alternative Minimum Tax was made permanent).
Lack of Leadership continues in Washington. We continue to look like Greece: lazy, fat and with no real leadership to make these tough decisions. We will see what happens next.
At the Law Firm of Steven Andrew Jackson, Attorney and Counsellor at Law, we have helped hundreds of families protect themselves and their loved ones, avoid Estate Taxes and Probate Costs, and keep their Estate Plans current with the law through The Customized Protective Estate Planning Solution™.